HomeMy WebLinkAboutItem 7b. Introduce Ordinance to amend Chapter 9.10 (Cannabis Regulations) and Annual Cannabis Business Program Update Item 7b
Department: Community Development
Cost Center: 4003
For Agenda of: 10/18/2022
Placement: Public Hearing
Estimated Time: 60 Minutes
FROM: Michael Codron, Community Development Director
Prepared By: Alex Fuchs, Cannabis Business Coordinator
Georgina Bailey, (Former) Cannabis Business Coordinator
SUBJECT: INTRODUCTION OF AN ORDINANCE TO AMEND MUNICIPAL CODE
CHAPTER 9.10 (CANNABIS REGULATIONS) AND ANNUAL CANNABIS
BUSINESS PROGRAM AND REGULATION UPDATE
RECOMMENDATION
1. Receive an update on the City’s Cannabis Business Program; and
2. Introduce an Ordinance entitled, “An Ordinance of the City Council of the City of San
Luis Obispo, California, amending Chapter 9.10 (Cannabis Regulations) of the
Municipal Code for Commercial Cannabis Business Businesses and Personal
Cultivation” clarifying the requirements for applying, obtaining, activating, and
renewing commercial cannabis operator permits in the City; and
3. Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, approving amendments to the Cannabis Operator Permit Ranking
Criteria” updating the merit criteria used in the evaluation of retail storefront cannabis
business operator permit applications; and
4. Provide direction to staff to further evaluate and return at the next annual cannabis
program update with recommendations addressing requests to modify specific
cannabis retail storefront rules regarding hours of operation, delivery operations by
retail stores, and age limits for medical cannabis customers.
POLICY CONTEXT
Staff has advised City Council throughout the development, implementation, and
administration of the Cannabis Business Program that this new process would be refined
over time based on operational and administrative experience, as well as operator and
public input. The proposed updates to Chapter 9.10 (Cannabis Regulations) and to the
retail storefront merit criteria presented as part of this report are meant to clarify existing
City intent and interpretation of the regulations governing commercial cannabis business
operations.
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Item 7b
The proposed changes are consistent with overall goals of the Cannabis Business
Program and are in the spirit of the City Council’s goals to protect the community’s
character and quality of life while ensuring cannabis business operations are well run and
sustainable.
The updates to the Cannabis Regulations are also consistent with Chapters 9.10 and
5.10 of the Municipal Code and Section 17.86.080 of the Zoning Code. It is also a general
best practice for the City to provide the clearest and most concise regulations to benefit
the community, businesses, staff, and the City Council.
REPORT-IN-BRIEF
Council has directed staff to return annually with an update regarding the implementation
of the Cannabis Business Program and potential changes to the regulations. This staff
report recommends updates to the Cannabis Business Program based on operational
and administrative experiences. It also includes information regarding future changes to
the program requested by current Cannabis Business Operator permit holders.
Since the last annual update in January 2021, the City has opened the annual application
period for cannabis businesses (other than storefront retail), further developed the
administrative and operational procedures necessary to implement the Cannabis
Business Program, assisted operators through cannabis permitting processes, and
continued to implement and manage the program in line with City Council’s direction.
Audits of existing businesses have occurred on schedule and the City is achieving its
financial and policy objectives with respect to cost recovery and tax revenue, except for
the retail applicant litigation cases defended by the City, in which resource expenditures
far outstrip cost recovery.
Before opening a new application period for the third and final retail storefront permit, staff
is recommending updates and clarifications to Chapter 9.10 (Cannabis Regulations) of
the City’s Municipal Code and the merit criteria of the scoring worksheet used by
individual reviewers in the application evaluation process for retail storefront permits. The
City recently opened an application period for Cannabis Business Operator Permits , other
than retail storefronts, during the month of July 2022. No new applications were received.
The Municipal Code provides the City Manager with the authori ty to open additional
application periods. If the City Council approves the proposed Municipal Code changes,
the City Manager will determine the best time to open up a new retail storefront application
period for the third and final retail storefront permi t. As this is a staff intensive process,
the City Manager will determine the best time to open the application period based on
workload priorities and will provide sufficient notice to the community to ensure that all
those interested will have the opportunity to participate.
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Item 7b
Based on staff’s experiences administering the Cannabis Business Program, the
proposed changes will: more clearly define terms relevant to the permitting process;
clarify and codify the grounds for automatic disqualification of applicants and the review
process available to applicants subject to automatic disqualification; increase the timeline
to activate an operator permit once a conditional permit is issued; make clarifications to
the operator permit revocation provisions to more expressly reflect the ongoing authority
of the City to disqualify or revoke permits for false or misleading statements in the
application process; more clearly define the revocation review processes applicable to
City actions prior to and after permit activation; and further define the limitations on and
requirements related to transfers of operating permits.
DISCUSSION
Cannabis Business Program Update
On January 26, 2022, City Council received a memorandum, included with this report as
Attachment A, regarding the current progress of the Cannabis Business Program for the
2021 calendar year and that informed the City Council of future program updates that
would be brought forth for consideration during a regularly scheduled City Council
meeting later in the year.
Since that memorandum was provided to City Council, another retail storefront business,
SLO CAL Roots opened and is operating in the City. The memorandum indicated that a
new delivery business, Pure SL, is anticipated to open sometime in 2022; however, Pure
SL never finalized their building permit and thus failed to timely activate the permit, which
is deemed an abandonment of the permit as detailed in section 9.10.070(D) of the
Municipal Code.
The City opened its annual application period (July 1 – July 31) in 2022 to applications
for all permit types except for retail storefront applications. No applications were received
during the open application period, but staff did field questions from interested parties in
advance of the open application period.
If the Council should adopt staff recommended Municipal Code amendments, a retail
storefront application period can be opened within a timeframe as approved by the City
Manager, which is consistent with section 9.10.070(B) of the Municipal Code. The
Cannabis Steering Committee has discussed opening a new application period and is
supportive of the decision with the understanding that pending legal issues pose a limited
risk with doing so.
The City Manager will take into consideration a variety of fa ctors in determining when the
next application period will commence, including staff workload and implementation of
other City priorities, to ensure that staff is ready to accept applications and open the next
30-day period for new retail storefront permit applications.
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Item 7b
Application and Retail Storefront Evaluation Merit Criteria Worksheet Update
Applications for new cannabis business operator permits require a substantial amount of
information be provided and reviewed by City staff. The City Council included these
requirements with its adoption of Ordinance No. 1647 (2018 Series), which was
consistent with public comment from potential business operators and members of the
public.
Staff updated the Commercial Cannabis Business Operator Permit Application for all
business types to clearly state that applicants are responsible for understanding and
complying with all defined terms relevant to the operator permit application process. The
application itself does not require approval by the City Council but is included as
Attachment B to the report for reference.
During the December 3, 2019, City Council meeting, staff recommend an additional,
separate review of all retail storefront criteria in advance of opening an application period
for that business type, now referred to as the “Retail Storefront Evaluation Merit Criteria
Worksheet” (“Worksheet”). Based on staff’s review, informed from feedback from the
cannabis review panel, internal multi-department staff teams, consultant
recommendations, and best practices from other municipalities , staff recommends
adopting a Resolution (Attachment C) to make minor updates and clarifications to several
merit criteria sections in the Worksheet.
The proposed changes would apply to the next retail storefront open application period.
Changes are recommended for the Community Benefit and Equity and Labor merit crit eria
as summarized below.
1. Community Benefit
a. Section 1.1B has been changed to remove the word “over” as it relates to
10-20 hours per month of community services to make clear that the two
points available will be given to commitments in that range. Five points are
available for commitment over 20 hours per month.
b. Section 1.3B has been changed to clarify what “a history of supporting local
community programs” means, which has been defined as “the past one
year.”
2. Equity and Labor
a. Section 3.4 has been eliminated, as State laws surrounding “labor peace
agreements” are already triggered for businesses with 20 employees.
Operational businesses will already have this component of their business
plan via state law and do not need to be scored on merit.
b. Removing Section 3.4 results in the maximum score for Equity and Labor
changing to 18 points.
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Item 7b
3. Total Merit Criteria Points Available
a. The total maximum points available for a Retail Storefront application is now
138 points.
Chapter 9.10 (Cannabis Regulations) Update
Staff is recommending changes to specific sections of Chapter 9.10 of the Municipal Code
to further clarify the requirements for applying for, obtaining, activating, and renewing
commercial cannabis operator permits. The recommendations are based on operational
and administrative experience as well as operator and public input. The proposed
disqualification, revocation, and appeal language changes were made to clarify existing
City intent and interpretation of its regulations and to elim inate, to the extent possible,
ambiguity in response to arguments made as part of the Elemental Wellness and Natural
Healing Center (NHC) litigation matters. A legislative draft of the Chapter 9.10 changes
can be found in Exhibit A of Attachment D to this report.
1. Definitions (9.10.020)
Definitions for the following terms have been added: Applicant, Financial Interest
Holder, Majority, Operator, Owner, Principal(s), Primary Principal, and Social
Equity Owner. These terms were previously defined in the Cannabis Business
Operator Permit Application but were not codified within the Chapter 9.10
Cannabis Regulations. These changes are recommended for clarity, consistency
and transparency of expectations.
2. Commercial Cannabis Operator Permit Application Procedures and Requirements
(9.10.070)
The Grounds for Automatic Disqualification (9.10.070(C)) has been expanded to
clearly state that conviction of any felony or offense related to the application for
or operation of cannabis businesses (whether or not specifically referenced in
Business & professions Code Section 26057), or criminal misconduct, in the five
years prior to the submittal of an application for a permit . Additionally, any false or
misleading statements or omissions made by the Applicant in the application
process is grounds for immediate notice of automatic disqualification of the
application and / or revocation of any permit issued .
Subsection D has been amended to extend the timeline to activate an Operator
Permit from 12 months to 24 months from the date of issuance. However, if a
permit is not activated within the allotted time frame, the section continues to
provide that failure to activate within the specified timeframe is deemed an
abandonment, causing the automatic lapse of the permit. Failure to timely activate
would require the applicant must submit a new application would prohibit an
applicant from operating in the City until a subsequent application is approved and
a permit activated.
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3. Suspension of Revocation of Permit (9.10.090) and Appeal (9.10.100)
The section has been amended to provide clarity that immediate revocation of a
permit at the time of application and continuously remains an available penalty for
criminal or regulatory misconduct following the activation of a p ermit and at any
time upon discovery of proof that an applicant provided false or misleading
statements during the application process upon which the City relied in issuing the
permit. The appeal processes applicable to revocations is now more clearly
detailed in section 9.10.100(E).
4. Prohibition on Transfer of Commercial Cannabis Operator Permits (9.10.120)
The section has been expanded to include a three -year moratorium prohibiting
majority transfer of ownership after a permit is activated a majority transfer is
defined as a transfer of ownership in aggregate of 50% or more to persons that
are not Applicants, Owners, or Financial Interest Holders as identified during the
application process. Additionally, transfers of any interest in a business is
prohibited from the time of Application through the activation of a permit.
Transfers of ownership are also prohibited if they result in a reduction or elimination
of the number of Social Equity Owners or the percentage of interest of social equity
ownership when compared to the original application submitted to the City.
Transfers involving Equity Owners, or their interests, must be reported and verified
by the City for approval.
Owners, Permit Holders, and Financial Interest Holders in a retail storefront are
also proposed to be prohibited from obtaining ownership interests of any kind in
more than one storefront operated in the City. If approved, any transfer that
violates this section will immediately void or terminate the business’ operating
permit of any permitted business whose designated parties violate the provision.
5. Inspections and Enforcement (9.10.140)
Any commercial cannabis business found in violation of Chapter 9.10 throughout
the application and permitting process will be subject to the enforcement provisions
of this chapter.
Requests to Modify Specific Commercial Cannabis Policies
Since the last City Council update in January 2021, staff has received requests from the
two retail storefront cannabis businesses, Megan’s Organic Market and SLO Cal Roots,
to modify three specific retail storefront operating policies. Staff is seeking input and
direction from City Council to further evaluate and return with recommendations
on the following policy changes.
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Item 7b
Staff anticipates returning in early 2023 with recommendations included as part of the
annual Cannabis Business Program update if Council directs staff to pursue all or any
combination of the requested policy changes.
1. Extend Storefront Operating Hours
Operators are requesting extension of the operating hours for cannabis retail
storefronts from 9:00am - 8:00pm to 7:00am - 9:00pm. They have noted that the
City has the most restrictive hours of operations for retail storefronts compared to
other cities in San Luis Obispo County as shown in Table 1.1 below. The requested
change in operating hours is within the City’s authority since the State of California
allows for retail cannabis businesses to operate between 6:00am – 10:00pm, daily.
Retail Operating Hours
SLO Delivery 6AM – 10PM
SLO Storefronts (Current) 9AM – 8PM
SLO Storefronts (Requested) 7AM – 9PM
City of Morro Bay 7AM – 9PM
City of Grover Beach 7AM – 9PM
State of California 6AM – 10PM
Table 1.1: Comparison of Retail Operating Hours
Extending the retail storefront operating hours would have an impact on tax
revenue generation; however, staff has not estimated what that impact may be if
approved and implemented. Staff would prepare and present potential tax revenue
impacts as well as other potential impacts if Counci l directs staff to return with
Municipal Code amendments approving the change in operating hours.
If Council were to direct these changes immediately, amendment language could
be provided to accomplish that direction prior to Ordinance introduction, but staff
would not be able to conduct additional analysis of potential impacts of such a
change.
2. Allow Aged 18+ Medical Cannabis User Access to Storefronts
Operators have requested amending the cannabis regulations to allow aged 18+
medical cannabis users to access retail storefronts. The City’s cannabis
regulations currently allow delivery to aged 18+ medical cannabis users but does
not allow those users to access retail storefronts. The requested change is within
the City’s authority since the State of California allows adults aged 21+ and
medicinal patients aged 18+ with a physician’s recommendation to purchase
cannabis in retail storefronts. The City’s current regulations restrict the ability of
medicinal cannabis patients aged 18-20 to obtain medicine from businesses within
the City that may be deemed necessary for certain individuals by a licensed
physician.
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3. Allow Storefronts to Deliver within the City
Operators have also requested allowing City permitted storefronts to deliver within
the City. The current regulations prohibit storefronts from also operating a delivery
service in the City. Again, the requested change is within the City’s authority, since
the State of California allows a business to conduct both types of operations ,
unless doing so is restricted further by local code. Both the City of Morro Bay and
the City of Grover Beach allow storefront retailers to engage in delivery services.
Under state law, the City cannot restrict retailers licensed in other jurisdictions from
delivering to customers within the City.
Previous City Council Action
The following is a summary of the major actions taken by City Council on the Cannabis
Business Program.
1. February 2, 2021 – Council adopted Ordinance No. 1691 (2021 Series) amending
Chapter 9.10 (Cannabis Regulations) and Chapter 5.10 (Cannabis Business Tax)
to establish uniform permit renewal requirements.
2. January 14, 2020 – Council adopted Ordinance No. 1673 (2019 Series) amending
Chapter 9.10 (Cannabis Regulations) of the Municipal Code updatin g the
application procedures and requirements for commercial cannabis operator
permits.
3. December 3, 2019 – Council adopted Resolution No. 11067 (2019 Series)
updating the cannabis operator permit ranking criteria and establishing an annual
application submittal timeframe.
4. December 3, 2018 – Council adopted Ordinance No. 1659 (2018 Series) amending
Title 5 of the Municipal Code establishing taxes for cannabis business operations.
5. October 16, 2018 – Council adopted Resolution No. 10966 (2018 Series)
approving the cannabis operator permit ranking criteria and establishing an annual
application submittal timeframe.
6. September 18, 2018 – Council adopted Ordinance No. 1653 (2018 Series)
amending the zoning code and zoning map to designate areas of the City where
cannabis business activity may be located.
7. May 15, 2018 – Council adopted Ordinance No. 1647 (2018 Series) amending Title
9 (Public Peace, Morals, and Welfare) and Title 17 (Zoning Regulations) of the
Municipal Code establishing regulations for commercial cannabis businesses and
personal cultivation.
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Item 7b
Public Engagement
Staff have been in regular communication with applicants, business operators, and
industry representatives; receiving feedback on a wide range of issues related to the
implementation of the Cannabis Business Program. A Cannabis Business Program
update memorandum was provided to City Council on January 26, 2022. And, a Cannabis
Business Program update was presented to the San Luis Obispo Chamber of Commerce
on June 9, 2022, including an overview of the recommended changes being presented to
the City Council for action.
CONCURRENCE
A Steering Committee and Cannabis Team of City staff members from Administration,
City Attorney’s office, Community Development Department, Finance Department, and
Police Department convened to guide the process of developing updates and regulations
for consideration by the City Council.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended
action in this repot because the recommended actions do not constitute a “Project” under
CEQA Guidelines Sec. 15378. The introduction and adoption of the cannabis regulatory
changes is an administrative activity of a government agency that will not result in direct
or indirect physical impact on the environment. Future applications for commercial
cannabis business activities in the City will be subject to the California Enviro nmental
Quality Act (CEQA), per the normal environmental review process.
FISCAL IMPACT
Budgeted: Yes Budget Year: On-going
Funding Identified: Yes
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ 0 $ 0 $ 0 $ 0
State
Federal
Fees
Other:
Total $ 0 $ 0 $ 0 $ 0
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Item 7b
There will be no fiscal impact to implement the proposed updates to Chapter 9.10 of the
Municipal Code, the changes to the application form, or the changes to the Merit Criteria
for storefront permits.
However, some of the contemplated changes could have a positive fiscal impact as
business practices are expanded yielding the opportunity for an increased base for
applicable cannabis tax to the City. The City’s supplemental budget forecasts a revenue
of $1.4 million for FY2022-23 from cannabis tax.
ALTERNATIVES
1. Do not adopt staff recommendations. This is not recommended as it does not align
with the City Council’s overall cannabis goal to obtain and retain qualified cannabis
business operators in the City.
2. Modify and Direct the Proposed Resolution. The City Council has the latitude to
make modifications to the Cannabis Operator Permit Application Requirements and
Ranking Merit Criteria. The Council has the policy discretion to adjust application
requirements and ranking criteria and Staff will be prepared to offer any ideas for
adjustments.
3. Modify and Direct the Proposed Ordinance Amendments. The City Council has
the latitude to make further modifications to the proposed Chapter 9.10 Municipal
Code updates. The Council has the policy discretion to adjust the cannabis regulations
and Staff will be prepared to offer any ideas for adjustments.
ATTACHMENTS
A – January 26, 2022, City Council Memorandum
B – Updated Cannabis Business Operator Permit Application
C – Draft Ordinance adopting updates to the Merit Criteria for Retail Storefront
Applications
D – Draft Ordinance amending Chapter 9.10 of the Municipal Code
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DATE: January 26, 2022
TO: Mayor and City Council
FROM: Michael Codron, Community Development Director
VIA: Derek Johnson, City Manager
PREPARED BY: Georgina Bailey, Cannabis Program Coordinator
SUBJECT: Cannabis Program Update
The purpose of this memorandum is to update the City Council regarding the current progress of
the cannabis program for the 2021 calendar year and to inform the City Council of future
cannabis program updates that will be brought to City Council for consideration during a
regularly scheduled City Council meeting in 2022. This update is typically provided at a City
Council meeting in December, but that was not possible this past year due to other emergent
priorities for program staff and impacted Council meeting agendas.
Current Progress of the Cannabis Program in 2021
The City of San Luis Obispo adopted regulations to implement a Cannabis Business Program
after the passage of Proposition 64 that were informed through public engagement, industry
outreach and City Council direction. The initial regulations were adopted by the City Council on
November 27, 2018. Staff returned to City Council on December 3, 2019, and January 19, 2021
to provide cannabis program updates and recommended changes to application fees and cannabis
regulations. City Council directed staff to return with an update regarding the implementation of
the Cannabis Business Program and potential updates to the regulations in the next year.
During this past year, the City has opened the annual application period for cannabis businesses,
continually developed the administrative and operational procedures necessary to implement the
Cannabis Business Program, assisted operators through cannabis permitting processes, and
continued to implement and manage the program in line with City Council policy and direction.
Annual Application Period
No business applied during the most recent annual application period held from July 1 – July 31,
2021. During the application period staff fielded questions from interested applicants and
provided additional resources to applicants on the City’s website, including a Merit Criteria
Example Sheet and a Cannabis Operator Permit Application Procedures Guide. Since the annual
application period, staff has continued to field questions from interested applicants and staff
expects more applicants will apply during the next annual application period in 2022.
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Operator Updates
Business Business Status
Retail Storefront
Megan’s Organic Market Open and operating in the City.
SLO Cal Roots Received a Conditional Use Permit on July 14, 2021. The
business’ is expected to be open by March 23, 2022.
Natural Healing Center Operator Permit was terminated October 6, 2021.
Manufacturing, Distribution and Retail Non-Storefront
Coastal Delivery SLO Open and operating in the City.
Papa Bear Farms Open and operating in the City.
Pure SL Received a Minor Use Permit on June 14, 2021. The
business is expected to be open early 2022.
Cali Direct This operator decided to not continue pursuing an Operator
Permit in the City and dropped out of the permitting process
May 18, 2021.
Element 7 The Operator Permit automatically lapsed in line with
9.10.070 D.
The City currently has three cannabis businesses open and operating in the City, one retail
storefront, Megan’s Organic Market, and two delivery businesses, Coastal Delivery SLO, and
Papa Bear Farms. Coastal Delivery SLO has been open in the City since November 2019, and
the business successfully renewed their Operator Permit for FY 2021-22. Likewise, Megan’s
Organic Market has been open since August 2020 and the business successfully renewed their
Operator Permit for FY 2021-22. Papa Bear Farms was annexed into the City through the Fierro
Lane annexation, and after receiving a waiver for operator permit fees from City Council from
January 2021 – June 2021, Papa Bear Farms renewed their Operator Permit for FY 2021-22.
The City expects two additional cannabis businesses will open in 2022, one retail storefront,
SLO Cal Roots, and one delivery business, Pure SL. Both businesses are currently working to
complete their building permits and are expected to open early 2022.
Two delivery businesses, Cali Direct and Element 7, and one retail storefront, Natural Healing
Center, are no longer involved in the City’s Cannabis Operator Permit process. Cali Direct let the
City know May 18, 2021, that the business would no longer pursue a cannabis operator permit,
staff worked with the business throughout the permitting process and has let the business know
they are eligible to reapply for a cannabis operator permit in the future. Likewise, Element 7 had
until December 6, 2021 to activate their operator permit, but were unsuccessful in timely
activating their permit and as a result their Operator Permit automatically lapsed in line with
9.10.070 D. Staff was in contact with Element 7 and worked with them throughout the permitting
process, however the business delayed applying for both a land use permit and building permit
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and as a result their Operator Permit automatically lapsed. Element 7 is eligible to reapply for a
cannabis operator permit during the next or any subsequent cannabis application periods.
On October 6, 2021, Natural Healing Center was automatically disqualified from activating,
obtaining or holding an Operator Permit as a result of the business’ submission of false or
misleading information in obtaining and maintaining an Operator Permit. A maximum of three
retail storefront businesses are allowed in the City, and as a result of Natural Healing Center’s
Operator Permit being terminated, the City will need to reopen an cannabis application period to
permit a third retail storefront business.
Mobile Deliveries from outside of the City
Staff has continued to follow the City' s process to comply with State mandates allowing
operators licensed outside of the City to deliver into the City, while enforcing compliance with
the City' s Business License and Tax Ordinance. As a result of education and enforcement in
2021, two additional businesses outside of the City have come into compliance. The City
remains one of a few cities in the State that has been successful in bringing these businesses into
compliance. Staff will continue this process as resources and staff time allow in 2022.
Program Implementation and Management of Cannabis Businesses
The fees adopted by City Council January 19, 2021, capture the complete cost to implement and
oversee the City' s cannabis regulations for each business and the overall program. Included as a
part of the fees, on May 4, 2021, City Council authorized the City Manager to execute a contract
with HdL Companies to provide support services for the operations of the City’s Cannabis
Business Program, including regulatory compliance inspections, cannabis tax audits, and
background check renewals for owners and employees. HdL companies has worked with staff
this year to complete quarterly regulatory compliance inspections, has set up their system to
assist with background checks and background check renewals, and has started work on
completing cannabis tax audits for the three open businesses within the City. Working with HdL
has streamlined these processes for both businesses and City staff, which has provided an overall
benefit to the cannabis program. In 2022, HdL will continue to work with staff on quarterly
compliance checks, will assist in conducting background checks for owners and employees,
conduct audits for open businesses and will continue to provide support and technical assistance
to the cannabis program.
City staff have also worked with operators at all stages of the permitting process, have answered
all questions and requests received by operators, and continue to implement and manage the
cannabis program in line with Council policy and direction.
Cannabis Program Updates in 2022
Since the City Council has adopted the cannabis business program, staff has provided an annual
update with recommendations for improvements. In 2022, staff will bring additional cannabis
program updates to City Council for consideration and direction during a regularly scheduled
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City Council Meeting. Staff is targeting the May 17, 2022, City Council Meeting to bring
cannabis program updates for City Council consideration. These recommendations will include
updates to the City’s Cannabis Regulations and Commercial Cannabis Business Operator Permit
Application for Retail Storefronts.
Updates to Cannabis Regulations
Based on a review of current cannabis regulations and experience from the past year, staff will
recommend and seek direction on substantive updates to the cannabis regulations regarding
cannabis operator requests for transfers of ownership, operator ownership in multiple businesses
in the City, and additional clarifications to the cannabis regulations. All of these updates are
informed either through circumstances that staff has encountered with businesses this past year
or updates based on best practices and lessons learned from comparable jurisdictions.
Updates to Operator Permit Applications for Retail Storefronts
Staff will also bring updates to City Council regarding the Cannabis Business Operator Permit
Application for Retail Storefronts. On December 3, 2019, City Council adopted minor updates
and clarifications to the merit criteria and applications for all cannabis business types excluding
retail storefronts. Also, during the Dec 3, 2019 meeting, staff committed to bring a separate
review of the retail storefront merit criteria and application in advance of opening another retail
storefront application period. Staff will recommend the same minor application updates adopted
for all other application types be incorporated into the retail storefront application, in addition to
other updates of the retail storefront application and merit criteria once staff finalizes its review
of those documents.
The City is required by the originally adopted cannabis regulations to open the annual
application period from July 1 to July 31, 2022. It is staff’s intention to bring cannabis program
updates to City Council prior to opening the annual application period so the program updates
can be considered and adopted by City Council before opening the annual application period.
Meaning, if City Council adopted updates to the retail application prior to the annual application
period, those updates would be included as a part of the 2022 annual application period and
interested operators would be able to submit applications for all commercial cannabis activities
permitted in the city, including retail storefront applications.
Cannabis Program Department Transition
For the past three years, the cannabis program has been coordinated out of the Administration
Department as a way to incubate the program and provide support to the new and dynamic
challenges cannabis legalization posed. However, as the cannabis program stabilizes the program
is being transitioned out of the Administration Department and into the Community
Development Department. As a part of the transition the Cannabis Program Coordinator will
continue to coordinate the program and move over to the Community Development Department.
This transition will not disrupt the ongoing functions of the cannabis program and will provide a
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permanent structure to the cannabis program to continue the functions of the program in line
with City Council’s policies and directives.
Any inquiries that the Council receives from residents or general questions regarding the
cannabis program can be directed to Georgina Bailey, Cannabis Program Coordinator, at
gbailey@slocity.org or (805) 783-7875.
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CITY OF SAN LUIS OBISPO
Community Development Department
919 Palm Street, San Luis Obispo, CA 93401
805.781.7170
Commercial Cannabis Business Operator Permit Application XX.XX. 2022
A. Business Information
Business Name:
Property Address:
Assessor Parcel Number: Zoning Designation:
B. Business Type (Check all that apply)
Cultivation - Specialty (Up to 5,000
Sq. Ft. Max)
Cultivation - Small (5,001 - 10,000
Sq. Ft. Max)
Cultivation – Nursery (Up to 10,000
Sq. Ft. Max)
Manufacture (Non-volatile Raw Product Extraction) Manufacture (Cannabis Infusion) Manufacture (Itinerant – No
permanent facility) Manufacturer (Research and
Development Distributor Testing Laboratory
Transporter Microbusiness (No more than
50% gross receipts from
cultivation, distribution and
manufacturing)
Microbusiness (More than 50%
gross receipts from cultivation,
distribution and manufacturing)
Retailer Non-Storefront (Adult-use)
Retailer Non-Storefront (Medical)
Retail Non-Storefront (Adult-use and
Medical)
Retail Storefront (Adult-use) Retail Storefront (Medical) Retail Storefront (Adult-use and
Medical
C. Definitions
Applicant - The entity petitioning for the Cannabis Business Operator Permit.
Principal(s) - The individual members of the applicant team.
Primary Principal - An individual who has a 10% or greater ownership stake of the applicant business, which
includes partners, officers, directors, and stockholders of every corporation, limited liability company, or general
limited partnership that owns at least 10% of the stock, capital, profits, voting rights, or membership interest of the
commercial cannabis business or that is one of the partners in the commercial cannabis business; t he managers of
the commercial cannabis business.
Operator - An applicant that has been licensed and conducts or conducted active cannabis operations.
Majority - A greater number; more than half. An equal number does not constitute a majority.
All applicable definitions regarding the Commercial Cannabis Business Operator Permit Application can be found in 9.10
Cannabis Regulations of the City’s Municipal Code. It is the responsibility of the applicant to understand and comply with
all definitions of the Municipal Code and accurately present information reflecting the applicable definitions specified in
the Municipal Code in the Commercial Cannabis Business Operator Permit Application. It is the obligation of the Applicant
to request any necessary clarifications in writing to the City in advance of submission of an application. The failure of the
Applicant to request such clarification that results in the submission of false or misleading information in the application
process shall subject the Application to disqualification or other penalties as set forth in the Municipal Code.
Page 107 of 161
D. Applicant Information
Name of Primary Responsible Party Completing the Application:
Title:
DOB:
Social Security No:
If applicant is a not for profit, corporation, partnership, or other business entity, please identify:
Name of Business Entity:
Type of Ownership:
Federal Tax ID: Start Date:
Mailing Address:
Primary Phone No: Alt. Phone No:
Email Address
Preferred method of contact (check one) Mail Phone Email
Please attach additional sheets if there are more than 2 Responsible Parties.
F. Information on Property Owner or Landlord
Name:
Mailing Address:
Primary Phone No:
Alt. Phone No:
Email Address:
Preferred method of contact (check one) Mail Phone Email
If the applicant is not the legal owner of the property, the application must be accompanied by a notarized
Owner’s Statement of Consent to operate a commercial cannabis business on the property.
E. Additional Responsible Party Information
Name:
Title:
DOB:
Social Security No:
Mailing Address:
Primary Phone No:
Alt. Phone No:
Email Address:
Preferred method of contact (check one) Mail Phone Email
Page 108 of 161
G. Related License Information
The applicant and/or responsible parties has been associated with a commercial cannabis business permit in the
past 10 years.
Yes No (If yes, please provide the following information)
Name:
City or County:
Start Date: End Date:
Business Name:
Business Type:
Please attach additional sheets if necessary.
Page 109 of 161
R Required Submissions (Please check the box for each attachment)
Please submit the following documents as they pertain to your business type in bound form with a copy of this
application in the front, a table of contents, and dividers for each section. Please provide one hard copy and a
digital copy in a readable PDF form.
Please keep all explanations and descriptions brief; concise information, spreadsheets, and bullet pointed
formation is encouraged. The total submittal shall not exceed more than 75 pages. For any items that do not
apply, please provide a brief explanation as to why they do not apply.
Copy of the Application
Table of Contents
Base the table of contents in the order of the Evaluation Criteria for your business type. The Criteria can be found
online here and a Merit Criteria Example Sheet can be found here.
Additional information below that is not directly linked to the Evaluation Criteria shall also be listed in the table
of contents. (This is a list of supporting documentation that can be used to address the items listed in the
Evaluation Criteria).
Business Operations Plan
Business Plan: A plan describing how the commercial cannabis business will operate in accordance with City
code, state law, and other applicable regulations. The business plan must include plans for handling cash and
transporting cannabis and cannabis products to and from the site.
Products and Services: A list/description of the general products and services the business will provide
(recommend that products/services be listed within a spreadsheet format).
Community Relations Plan: A plan describing who is designated as being responsible for outreach and
communication with the surrounding community, including the neighborhood and businesses, and how the
designee can be contacted.
State Licenses: Copies of the state licenses relating to the commercial cannabis business licenses, the applicant
holds (when available).
Proof of Corporation Status: Provide proof of valid corporation status and doing business as (DBA), which
includes the identification of an agent of service.
Tax Compliance: A current copy of the applicant’s city business operations tax certificate, state sales tax seller’s
permit, and the applicant’s most recent year financial statement and tax return (for first time applicants, the
business operations tax account will be set up in-house after the application has been submitted).
Insurance: The applicant’s certificate of commercial general liability insurance and endorsements and
certificates of all other insurance related to the operation of the cannabis business.
Financial Capacity: Financial information such as bank balances, available loans and other sources of funding
the enterprise.
Budget: A copy of the applicant’s most recent annual budget for operations (if available).
Disclosure of Ownership and Financial Interest Holders: The applicant must disclose all owners and
financial interest holders in the commercial cannabis business. This includes all entities in a multi-layer business
structure, as well as the chief financial officer, members of the board of directors, partners, trustees, and all
Persons who have control of a trust, and managing members or non-members managers of the entity. Each
entity disclosed as having a financial interest must disclose the identities of Persons until only individuals remain.
(Maximum 2 pages)
Community Benefit: The applicant shall demonstrate to the satisfaction of the City of its intent to local hiring
and community support (maximum 2 pages).
Education Plan: A plan describing the type of cannabis education and prevention efforts that will be provided by
the business to the community (maximum 2 pages).
Security Plan: A detailed security plan outlining the measures that will be taken to ensure the safety of persons
and property on the business site. The security plan must be prepared by a qualified professional.
Lighting Plan: A detailed lighting plan showing existing and proposed exterior and interior lights that will provide
adequate security lighting for the business site (maximum 2 pages).
Page 110 of 161
Site and Floor Plans: A dimensioned site plan of the business site, including all buildings, structures, driveways,
parking lots, landscape areas and boundaries. Also provide dimensioned floor plans for each level of each building
that makes up the business site, including the entrances, exits, walls and cultivation areas, if applicable. The plans
shall also include the following information about the site: current zoning, parking requirements, consistency with
development standards for the zone, if new development planned for the site, and any other site development
information (maximum 5 pages).
Water Efficiency Plan: The applicant shall demonstrate to the satisfaction of the City that sufficient water supply
exists for the use (maximum 1 page).
Odor Control Plan: A detailed plan describing how the applicant will prevent all odors generated from the
cultivation, manufacturing and storage of cannabis from escaping from the buildings on the business site, such
that the odor cannot be detected by a reasonable person of normal sensitivity outside the buildings (maximum
2 pages).
Hazardous Materials Plan: To the extent that the applicant intends to use any hazardous materials in its
operations, the applicant shall provide a hazardous materials management plan that complies with all
federal, state and local requirements for management of such substances (maximum 2 pages).
Energy Efficiency Plan: Documentation that the applicant has identified the best way, including carbon free
power sources to provide reliable and efficient energy solutions for their business (maximum 2 pages).
H. Authorization and Consent
I, the applicant, provide authorization and consent for the City Manager or his/her designee to seek verification of
the information contained on this application.
I. Indemnification
I, the applicant, agree to the fullest extent permitted by law, any actions taken by a public officer or employee
under the City of San Luis Obispo regulations for Commercial Cannabis Businesses, shall not become a personal liability
of any public officer or employee of the City. To the maximum extent permitted by law, the permittee shall defend
(with counsel acceptable to the City), indemnify and hold harmless the City of San Luis Obispo, the San Luis Obispo
City Council, and its respective officials, officers, employees, representatives, agents and volunteers from any liability,
damages, actions, claims, demands, litigations, loss (direct or indirect), causes of action, proceedings, or judgments
(including legal costs, attorneys’ fees, expert witness or consultant fees, City Attorney or staff time, expenses or costs)
against the City to attach, set aside, void or annul, any cannabis-related approvals and actions and strictly comply
with the conditions under which such permit is granted, in any. The City may elect, in its sole discretion, to participate
in the defense of said action and the permittee shall reimburse the City for its reasonable legal costs and attorneys’
fees.
J. Nonrefundable Filing Fee
I, the applicant, understand and accept that the nonrefundable filling fee must be submitted with the competed
Commercial Cannabis Business Operators Permit Application and will be retained by the City regardless of the out-
come of the application review.
K. Background – Request for Live Scan Services
I, the applicant, understand that a completed and processed Request for Live Scan Service, State of California form BCIA 8016, as determined by the City of San Luis Obispo, by a duly authorized business must be provided for the applicant and all interested parties owners. All applicable fees and charges are the responsibility of the applicants and interested parties owners.
L. Disqualification
L. Disqualification
Application was received late.
Application is incomplete or
inaccurate.
Facility does not meet City business licensing standards.
More than one application is received for the same cannabis business type on one property (stacking of
applications). Page 111 of 161
The information contained on this document is subject to disclosure under the Public Records
Act.
Applicants providing false or misleading information in the permitting process will result in rejection of the application
and/or nullification or revocation of any issued permit. All commercial cannabis permits must be approved by the City
Council. The City may attach conditions to the permit. A commercial cannabis permit may be denied if any of the
following findings are made:
(i) The application does not meet all requirements of the commercial cannabis ordinance; or
(ii) Approval would very likely result in harm to public safety, health, or welfare; or
(iii) Potential negative impacts of the use cannot be mitigated with conditions or through the ordinance
requirements.
Applicants will be notified regarding application completeness.
M. Applicant ’s Certification
I agree to abide by and conform to the conditions of the permit and all provisions of the San Luis Obispo Municipal
Code pertaining to the establishment and operation of the commercial cannabis business. I acknowledge that the
approval of the Commercial Cannabis Business Operators Permit shall, in no way, permit any activity contrary to the
San Luis Obispo Municipal Code, or any activity which is in violation of any applicable law.
I certify under penalty of perjury under the laws of the State of California, that I have personal knowledge of the
information contained in this application, and that the information contained herein is true and correct.
Signature: Date:
Page 112 of 161
COMMERCIAL CANNABIS BUSINESS OPERATORS PERMIT APPLICATION
OWNER’S STATEMENT OF CONSENT
If the applicant is not the owner of record of the subject site, the following Statement of Consent must be completed
by the owner or the owner’s authorized representative, granting the applicant permission to apply for a cannabis
business operator permit.
I, the undersigned legal owner of record, hereby grant permission to:
Applicant: Phone:
Mailing Address:
To operate a commercial cannabis business on the property described below. I agree to abide by and conform to the
conditions of the permit and all provisions of the San Luis Obispo Municipal Code pertaining to the establishment and
operation of the commercial cannabis business. I acknowledge that the approval of the Commercial Cannabis
Business Operator Permit shall, in no way, permit any activity contrary to the San Luis Obispo Municipal Code, or any
activity which is in violation of any applicable law.
The subject property is located at:
Assessor’s Parcel Number: ________________________________________________________
Printed Name of Owner of Record:
Address of Owner of Record:
Phone: Email address:
Signature of Owner of Record: Date:
Page 113 of 161
Page 114 of 161
R _____
RESOLUTION NO. ______ (2022 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING AMENDMENTS TO THE
CANNABIS OPERATOR PERMIT RANKING CRITERIA
WHEREAS, in 2017, the California legislature passed, and Governor Brown
signed Senate Bill 94, which enacted the Medicinal and Adult -Use Cannabis Regulation
and Safety Act (“MAUCRSA”), repealed the Medical Cannabis Regulation and Safety Act
(“MCRSA”) but incorporated certain provisions of MCRSA into the licensing provisions
established by Proposition 64; and
WHEREAS, the City Council of the City of San Luis Obispo conducted a public
hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California,
on May 15, 2018 and adopted Ordinance No. 1647 (2018 Series) that amended Title 17
(Zoning Regulations) of the Municipal Code to establish land use regulations for the
operation of commercial cannabis businesses, and repealed and replaced Title 9, Public
Peace, Morals and Welfare (Chapter 9.10) of the Municipal Code related to cannabis
regulations; and
WHEREAS, the City Council of the City of San Luis Obispo adopted on November
27, 2018 in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California, a resolution that established the Cannabis Operator Permit Ranking Criteria
and the annual application submittal period as required by Section 9.10.070 of the
Municipal Code; and
WHEREAS, the City Council of the City of San Luis Obispo adopted on December
3, 2019 in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California,
a resolution amending the Cannabis Operator Permit Ranking Criteria; and
WHEREAS, the City Council of the City of San Luis Obispo conducted a public
hearing on September 20, 2022 in the Council Chamber of City Hall, 990 Palm Street,
San Luis Obispo, California, for the purpose of amending the Cannabis Operator Permit
Ranking Criteria (Exhibit A).
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Findings.
1. The proposed Cannabis Operator Permit Ranking Criteria (Exhibit A)
establishes the ranking criteria for individuals who apply for a Cannabis
Operator Permit to operate a cannabis business activity in the City consistent
with Municipal Code Section 9.10.070 (A) which requires City Council, by
resolution, to adopt criteria by which all applications will be reviewed and, in the
case of retail and cultivation businesses, also ranked.
Page 115 of 161
Resolution No. ______ (2022 Series) Page 2
R _____
SECTION 2. Environmental Review. The California Environmental Quality Act
(CEQA) does not apply to the recommended action in this repot because the action does
not constitute a “Project” under CEQA Guidelines Sec. 15378. The adoption of the
updated Cannabis Operator Permit Ranking Criteria is an administrative activity of a
government agency that will not result in direct or indirect physical impact on the
environment.
SECTION 3. Action. The City Council hereby approves the amended Cannabis
Operator Permit Ranking Criteria as outlined in Exhibit A subject to the following
conditions:
1. This resolution supersedes Resolution No. 11067 (2019 Series) to the extent
inconsistent herewith.
Upon motion of Council Member ____________, seconded by Council Member
_____________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _________ day of _____________ 2022.
___________________________
Mayor Erica A. Stewart
ATTEST:
__________________________
Teresa Purrington, City Clerk
APPROVED AS TO FORM:
____________________________
J. Christine Dietrick, City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington, City Clerk
Page 116 of 161
Resolution No. ______ (2022 Series) Page 3
R _____
CITY OF SAN LUIS OBISPO
Cannabis Business Operator Permit 1Scoring
Guidelines
1. Applicant will provide one hard copy and a digital copy in a readable PDF form of each application and
proposal.
2. City will compile any additional information related to the applicant for consideration.
3. Discussion between the reviewers during the evaluation will be limited to clarification to ensure an equal
understanding of the application.
4. Questions can also be directed to the consultant.
5. Each reviewer will complete a score sheet for each proposal.
6. Points may be awarded in an amount up to the possible points in each scoring criteria.
7. Each completed score sheet will be given to the consultant.
8. The consultant will review the score sheets for each proposal.
9. If there is a scoring deviation between reviewers on any scoring criteria of more than 30%, the consultant
will discuss this specific score with the reviewers.
10. An adjusted score may be agreed upon by the reviewers and the consultant.
11. Once all criteria scores are reviewed and agreed upon, the total aggregate score for the review panel will
be totaled then divided by the number of reviewers to obtain the final score.
12. For an applicant to qualify for a contingent operator permit, the applicant must score from an average of
all scorers at or above 70% of the total available points on the application of that application period.
1 Changes made to this page for the Cannabis Business Operator Permit Scoring Guidelines to mirror language used
on the Commercial Cannabis Business Operator Permit Application and to correctly reflect the structure of the
seven-member Review Panel.
Applicant:
Reviewer:
Automatic Fail Criteria:
·Application received after the final filing date.
·Application is incomplete or inaccurate.
·Facility does not meet City business licensing standards.
·Only one license applicant allowed per location. Applicants must ask potential landlords if
they have existing, competing cannabis business applicants.
Page 117 of 161
EXHIBIT A
Adult-Use Retail Cannabis Merit-Based Criteria and Possible Points
All applications for a license will be evaluated using the merit criteria outlined below. Applicants must
submit supplemental documentation or references with the application that support the statements
below for review by the City.
Definitions:
All applicable definitions regarding the Commercial Cannabis Business Operator Permit Application can be
found in 9.10 Cannabis Regulations of the City’s Municipal Code. It is the responsibility of the applicant to
understand and comply with all definitions of the Municipal Code and accurately present information
reflecting the applicable definitions specified in the Municipal Code in the Commercial Cannabis Business
Operator Permit Application. It is the obligation of the Applicant to request any necessary clarifications in
writing to the City in advance of submission of an application. The failure of the Applicant to request such
clarification that results in the submission of false or misleading information in the application process shall
subject the Application to disqualification or other penalties as set forth in the Municipal Code.
Definitions:
An "applicant" is the entity petitioning for the Cannabis Business Operator Permit.
A "principal(s)" are the individual members of the applicant team.
A "primary principal" is defined as an individual who has a 10% or greater ownership stake of the applicant
business.
An "operator" is an applicant that has been licensed and conducts or conducted active cannabis operations.
A "majority" is defined as a greater number; more than half. An equal number does not constitute a
majority.
Page 118 of 161
EXHIBIT A
Manufacturing, Distribution and Non-Storefront Retail Evaluation Criteria
Merit Criteria 1.0 - Community Benefit
Community Benefit (A): Applicant demonstrates a commitment to City through
local hiring and community support. Select all that apply within each category
and total score. (Up to 20 Points – Deviation Threshold 6 Points)
Possible
points
Applicant
score
1.1A
Over 90% of employees will be San Luis Obispo County residents. (10 points)
or 60% - 90% of employees will be San Luis Obispo County residents. (5 points)
10
1.2A
Over 80% of supply and equipment expense (non-labor, non-rent expense) will be
sourced from businesses within 90 miles. (10 points)
or 50% - 80% of supply and equipment expense (non-labor, non-rent expense)
will be sourced from local businesses within 90 miles. (5 points)
10
Total Community Benefit (A) 20
Community Benefit (B): Continued support of community programs in San Luis
Obispo (i.e. park cleanups, facility improvements, donating supplies/equipment to
youth programs). (Up to 15 Points - Deviation Threshold 3 points)
Possible
points
Applicant
score
1.1B
Providing over 20 hours per month of community support. (5 points)
or Providing 10-20 hours per month of community support. (2 points)
5
1.2B
Provide over $1,000 per month for community support. (5 points)
or Provide up to $1,000 per month for community support. (2 points)
5
1.3B Applicant can demonstrate a history of supporting local community programs for
the past one to two years. (5 points) 5
Total Community Benefit (B) 15
Total Merit Criteria 1.0 35
Page 119 of 161
EXHIBIT A
Merit Criteria 2.0 - Equity and Labor
Applicant commits to equity ownership and competitive compensation in
comparison to other mainstream commercial businesses. Applicants commitment
will be confirmed during annual permit renewal process. Select all that apply and
total score. (Up to 20 Points – Deviation Threshold 9 Points)
Possible
points
Applicant
score
2.1
Applicant includes 3 or more principals with 2% equity or higher who have earned
at or below the median household income at the time of application. (8 points)
or Applicant includes 1 or 2 primary principals who have earned at or below the
median household income at the time of application. (4 points)
8
2.2
Business will have an average pay rate for entry and mid-level positions of at least
40% more than the median local income for similar positions in other mainstream
businesses. (8 points)
or Business will have an average pay rate for entry and mid-level positions of at
least 20% more than the median local income for similar positions in other
mainstream businesses. (4 points)
8
2.3
Base wages of employees exceed the minimum wage by at least $3.00/hr.
2
Total Merit Criteria 2.0 18
Page 120 of 161
EXHIBIT A
Merit Criteria 3.0 - Financial Investment
Financial Investment: Applicant has plans and capital to support a vibrant
business within the City. (Up to 25 Points – Deviation Threshold 3 Points)
Possible
points
Applicant
score
3.1 Applicant demonstrates financial capacity to capitalize, start up, and sustain
business operations.
1-10
3.2 Applicant commits to develop raw land that has been zoned for commercial use
for a commercial cannabis facility.
1-10
3.3
Applicant commits to major improvements, including façade rehabilitation,
building expansion, site improvements and/or other investments in an
underutilized/underdeveloped site that has been zoned for commercial use for a
commercial cannabis facility.
1-5
3.4 The proposed cannabis business site can accommodate the required number of
parking spaces with safe and convenient access for customers/employees.
1-5
Total Merit Criteria 3.0 30
Totals
Total GENERAL Merit Criteria Points Available 83
Total GENERAL Merit Criteria Points Awarded
Total %
Page 121 of 161
EXHIBIT A
Cultivation Evaluation Criteria
Merit Criteria 1.0 - Community Benefit
Community Benefit (A): Applicant demonstrates a commitment to City through
local hiring and community support. Select all that apply within each category
and total score. (Up to 20 Points – Deviation Threshold 6 Points)
Possible
points
Applicant
score
1.1A
Over 90% of employees will be San Luis Obispo County residents. (10 points)
or 60% - 90% of employees will be San Luis Obispo County residents. (5 points)
10
1.2A
Over 80% of supply and equipment expense (non-labor, non-rent expense) will be
sourced from businesses within 90 miles. (10 points)
or 50% - 80% of supply and equipment expense (non-labor, non-rent expense)
will be sourced from local businesses within 90 miles. (5 points)
10
Total Community Benefit (A) 20
Community Benefit (B): Continued support of community programs in San Luis
Obispo (i.e. park cleanups, facility improvements, donating supplies/equipment to
youth programs). (Up to 152 Points - Deviation Threshold 3 points)
Possible
points
Applicant
score
1.1B
Providing over 20 hours per month of community support. (5 points)
or Providing over 10-20 hours per month of community support. (2 points)
5
1.2B
Provide over $1,000 per month for community support. (5 points)
or Provide up to $1,000 per month for community support. (2 points)
5
1.3B Applicant can demonstrate a history of supporting local community programs for the
past one to two years.3(5 points)
5
Total Community Benefit (B) 15
Total Merit Criteria 1.0 35
2 Correction to possible points available in “Community Benefit (B)”.
3 Specifies the range for demonstrating a “history” of supporting local community programs.
Page 122 of 161
EXHIBIT A
Merit Criteria 2.0 - Equity and Labor
Applicant commits to equity ownership and competitive compensation in
comparison to other mainstream commercial businesses. Applicants commitment
will be confirmed during annual permit renewal process. Select all that apply and
total score. (Up to 20 Points – Deviation Threshold 9 Points)
Possible
points
Applicant
score
2.1
Applicant includes 3 or more principals with 2% equity or higher who have earned
at or below the median household income at the time of application. (8 points)
or Applicant includes 1 or 2 primary principals who have earned at or below the
median household income at the time of application. (4 points)
8
2.2
Business will have an average pay rate for entry and mid-level positions of at least
40% more than the median local income for similar positions in other mainstream
businesses. (8 points)
or Business will have an average pay rate for entry and mid-level positions of at
least 20% more than the median local income for similar positions in other
mainstream businesses. (4 points)
8
2.3
Base wages of employees exceed the minimum wage by at least $3.00/hr.
2
Total Merit Criteria 2.0 184
Merit Criteria 3.0 - Medical Retail Commitment
Medical Retail Commitment (up to 10 points) Possible
points
Applicant
score
3.1 Applicant commits to retain a California state medicinal cannabis cultivation
license. 10
Total Merit Criteria 3.0 10
4 New total merit criteria points available in “2.0 Equity and Labor”.
Page 123 of 161
EXHIBIT A
Merit Criteria 4.0 - Sustainability
Applicant demonstrates past experience in and/or commits to sustainable and
environmental business or building practices utilizing recognized industry
standards. Applicants actions will be confirmed during annual permit renewal
process. Select all that apply and total score. (Up to 20 Points – Deviation
Threshold 6 Points)
Possible
points
Applicant
score
4.1
Applicant will recycle waste water (utilize purple pipe when available).
5
4.2
Applicant will utilize certified organic practices.
3
4.3
Applicant will utilize carbon free power sources for majority of power.
5
4.4
Applicant will utilize energy efficient lighting.
4
4.5
Applicant has plan to reduce water waste.
3
Total Merit Criteria 4.0 20
Merit Criteria 5.0 - Financial Investment
Financial Investment: Applicant has plans and capital to support a vibrant
business within the City. (Up to 25 Points – Deviation Threshold 3 Points)
Possible
points
Applicant
score
5.1 Applicant demonstrates financial capacity to capitalize, start up, and sustain
business operations.
1-10
5.2 Applicant commits to develop raw land that has been zoned for commercial use
for a commercial cannabis facility.
1-10
5.3
Applicant commits to major improvements, including façade rehabilitation,
building expansion, site improvements, removing visual blight, and/or other
investments in an underutilized/underdeveloped site that has been zoned for
commercial use for a commercial cannabis facility.
1-5
5.4
The proposed cannabis business site can accommodate the required number of
parking spaces with safe and convenient access for customers/employees.
1-5
Total Merit Criteria 5.0 30
Page 124 of 161
EXHIBIT A
Totals
Total Merit Criteria Points Available 113
Total Merit Criteria Points Awarded
Total %
Page 125 of 161
EXHIBIT A
Retail Evaluation Criteria
Merit Criteria 1.0 - Community Benefit
Community Benefit (A): Applicant demonstrates a commitment to City through
local hiring and community support. Select all that apply within each category
and total score. (Up to 20 Points – Deviation Threshold 6 Points)
Possible
points
Applicant
score
1.1A
Over 90% of employees will be San Luis Obispo County residents. (10 points)
10
or 60% - 90% of employees will be San Luis Obispo County residents. (5 points)
1.2A
Over 80% of supply and equipment expense (non-labor, non-rent expense) will be
sourced from businesses within 90 miles. (10 points)
10
or 50% - 80% of supply and equipment expense (non-labor, non-rent expense)
will be sourced from local businesses within 90 miles. (5 points)
Total Community Benefit (A) 20
Community Benefit (B): Continued support of community programs in San Luis
Obispo (i.e. park cleanups, facility improvements, donating supplies/equipment to
youth programs). (Up to 155Points - Deviation Threshold 3 points)
Possible
points
Applicant
score
1.1B
Providing over 20 hours per month of community support. (5 points)
5
or Providing over6 10-20 hours per month of community support. (2 points)
1.2B
Provide over $1,000 per month for community support. (5 points)
5
or Provide up to $1,000 per month for community support. (2 points)
1.3B Applicant can demonstrate a history of supporting local community programs
for the past one year.7
5
Total Community Benefit (B) 15
Total Merit Criteria 1.0 35
5 Correction to possible points available in “Community Benefit (B)”.
6 Clarifies range between “over 20 hours” ( worth 5 points) “ and 10 -20 hours” ( 2 points)
7 Specifies the range for demonstrating a “history” of supporting local community programs.
Page 126 of 161
EXHIBIT A
Merit Criteria 2.0 - Experience
Record of compliant current or previous business operations: Applicant has
previous record of operating a compliant cannabis operation (including medical).
A compliant operation is defined as having a substantially compliant record (may
have some minor resolved/corrected violations) without a documented history of
unresolved local or state level violations relating, but not limited to: business code,
public safety, environmental impacts, employment, and financial payments. (Up
to 30 Points – Deviation Threshold 9 Points)
Possible
points
Applicant
score
2.1
91% to 100% of the primary principals have operated a local compliant cannabis
operation for 5 or more years.
35
or 81% to 90% of the primary principals have operated a local compliant
cannabis operation for 5 or more years.
30
or 71% to 80% of the primary principals have operated a local compliant
cannabis operation for 5 or more years.
25
or 61% to 70% of the primary principals have operated a local compliant
cannabis operation for 5 or more years.
20
or 51% to 60% of the primary principals have operated a local compliant
commercial cannabis operation for 5 or more years.
15
2.2
10-50% of the primary principals operated a compliant cannabis operation outside
of SLO County for 5 or more years.
10
or 10-50% of the primary principals operated a compliant cannabis operation
outside of SLO County for less than 5 years.
5
Total Merit Criteria 2.0 35
Page 127 of 161
EXHIBIT A
Merit Criteria 3.0 - Equity and Labor
Applicant commits to equity ownership and competitive compensation in
comparison to other mainstream commercial businesses. Applicants commitment
will be confirmed during annual permit renewal process. Select all that apply and
total score. (Up to 20 Points – Deviation Threshold 9 Points)
Possible
points
Applicant
score
3.1
Applicant includes 3 or more principals with 2% equity or higher who have earned
at or below the median household income at the time of application. (8 points)
8
or Applicant includes 1 or 2 primary principals who have earned at or below the
median household income at the time of application. (4 points)
3.2
Business will have an average pay rate for entry and mid-level positions of at least
40% more than the median local income for similar positions in other mainstream
businesses. (8 points)
8
or Business will have an average pay rate for entry and mid-level positions of at
least 20% more than the median local income for similar positions in other
mainstream businesses. (4 points)
3.3 Base wages of employees exceed the minimum wage by at least $3.00/hr. 2
3.4
Business will allow "labor peace agreement" at 20 or more non-management
employees.8
2
Total Merit Criteria 3.0
189
8 Eliminate the “labor peace agreement” for “non-management” points; state law triggers at any 20 employees.
9 New total merit criteria points available in “2.0 Equity and Labor”.
Page 128 of 161
EXHIBIT A
Merit Criteria 4.0 - Messaging
4.1
Applicant commits to responsible use messaging practices. Select all that apply
and total score. (Up to 10 Points – Deviation Threshold 3 Points)
Possible
points
Applicant
score
4.2
Business articulates strategy to keep cannabis from being diverted to minors
including advertising that is appropriately targeted to adult audiences.
1-5
4.3
Business promotes responsible use including messaging on packaging, offering
lower dose THC product options, offering to track use via "user determined
quotas", posting information on cannabis use disorder and cautions re:
development of the adolescent brain.
1-5
Total Merit Criteria 4.0 10
Merit Criteria 5.0 - Medical Retail Commitment
Medical Retail Commitment (up to 10 points) Possible
points
Applicant
score
5.1
Applicant commits to provide retail medical cannabis products to consumers.
10
Total Merit Criteria 5.0 10
Page 129 of 161
EXHIBIT A
Merit Criteria 6.0 - Property Control
Control of business location: Applicant demonstrates control of a site to ensure a
successful and timely transition from being awarded a license to opening the
business. Incomplete purchase or lease agreements do not constitute site control.
(Up to 10 Points – Deviation Threshold 3 Points)
Possible
points
Applicant
score
Choose one:
6.1
Majority ownership in site property.
10
6.2
Minority ownership in site property.
8
6.3
10+ years future lease of site property.
8
6.4
5-10 years future lease of site property.
5
6.5
2-5 years future lease of site property.
3
6.6
Less than 2 years future lease of site property.
1
Total Merit Criteria 6.0 10
Merit Criteria 7.0 - Financial Investment
Financial Investment: Applicant has plans and capital to support a vibrant
business within the City. (Up to 25 Points – Deviation Threshold 3 Points)
Possible
points
Applicant
score
7.1 Applicant demonstrates financial capacity to capitalize, start up, and sustain
business operations.
1-10
7.2
Applicant commits to major improvements, including façade rehabilitation,
building expansion, site improvements, removing visual blight, and/or other
investments in an underutilized/underdeveloped site that has been zoned for
commercial use for a commercial cannabis facility.
1-5
7.3 The proposed cannabis business site can accommodate the required number of
parking spaces and safe and convenient access for customers/employees.
1-5
Total Merit Criteria 7.0 20
Page 130 of 161
Totals
Total Merit Criteria Points Available 13810
Total Merit Criteria Points Awarded
Total %
10 New total for “General Merit Criteria Points Available”.
Page 131 of 161
Page 132 of 161
O ______
ORDINANCE NO. _____ (2022 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AMENDING CHAPTER 9.10 (CANNABIS
REGULATIONS) OF THE MUNICIPAL CODE FOR COMMERCIAL
CANNABIS OPERATOR PERMITS AND PERSONAL CULTIVATION
WHEREAS, on November 8, 2016, California voters approved Proposition 64, the
Adult Use of Marijuana Act, which created a comprehensive regulatory and dual licensing
system for commercial cannabis activity in the State of California effective January 2018;
and
WHEREAS, Proposition 64 was passed by a sixty-seven percent (67%) of the
voters in the City of San Luis Obispo; and
WHEREAS, prior to the passage of Proposition 64, the City took the position that
commercial cannabis activity was prohibited in the city under the principles of permissive
zoning, which holds that uses that are not expressly allowed or conditionally allowed
under zoning regulations are prohibited within the City; and
WHEREAS, after the passage of Proposition 64, the City Council of the City of San
Luis Obispo adopted on April 4, 2017 in the City Council Chamber of City Hall, 990 Palm
Street, San Luis Obispo, California, an Ordinance No. 1633 (2017 Series), amending
Chapter 9.10 of the Municipal Code to maintain the status quo while the City conducted
public outreach; and
WHEREAS, the City Council of the City of San Luis Obispo adopted on May 22,
2018 in the City Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California, an Ordinance No. 1647 (2018 Series), amending Title 9 (Public Peace, Morals,
and Welfare) and Title 17 (Zoning Regulations) of the Municipal Code allowing for
Commercial Cannabis Business and personal cultivation activities in the city; and
WHEREAS, the City Council of the City of San Luis Obispo adopted on January
14, 2020 in the City Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California, an Ordinance No. 1673 (2019 Series), amending Chapter 9.10 (Cannabis
Regulations) of the Municipal Code modifying the Commercial Cannabis Operator Permit
application procedures and requirements; and
WHEREAS, the City Council of the City of San Luis Obispo adopted on February
2, 2021 in the City Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California, an Ordinance No. 1691 (2021 Series), amending Chapter 9.10 (Cannabis
Regulations) and Chapter 5.10 (Cannabis Business Tax) of the Municipal Code
establishing an expiration date and registration requirements for all cannabis Operator
permits; and
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WHEREAS, after administration and operation of the commercial cannabis
program, staff has identified necessary changes to Chapter 9.10 of the Municipal Code
to clarify the application and operational requirements for commercial cannabis permit
holders; and
WHEREAS, the City Council of the City of San Luis Obispo on September 20,
2022 in the City Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California, considered the recommended changes to Chapter 9.10 of the Municipal Code
and held a public meeting to review and discuss the proposed changes.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Section 9.10.020, subsection B of the San Luis Obispo Municipal
Code is hereby amended as reflected in Exhibit A to read as follows:
B. City defined terms. The following words or terms used in this chapter have the
following meanings:
1. “Applicant” means the individual or entity applying for the Commercial
Cannabis Business Operator Permit, including each entity or individual
identified as part of the Applicant team or who is an Owner or Principal of an
entity applying for a Permit.
2. “Commercial Cannabis Business” means any person or entity engaging in
any business, operation or activity which is Commercial Cannabis Activity
under state law in the City.
3. “Commercial Cannabis Operator Permit” means a permit required by the City
of San Luis Obispo pursuant to this chapter to conduct Commercial
Cannabis Activity or a Commercial Cannabis Business in the City.
4. “Financial Interest Holder” means a person or entity (other than a Social
Equity Owner) who has less than a 10% aggregate ownership interest in the
Commercial Cannabis Business, has no active or passive direction, control,
or management of the Commercial Cannabis Business, and otherwise
meets the definitions of Financial Interest Holder as set forth in the
Department of Cannabis Control Medicinal and Adult -Use Commercial
Cannabis Regulations California Code of Regulations Title 4 Division 19.
Department of Cannabis Control. For purposes this Chapter, the aggregate
ownership threshold herein shall supersede any current (20%) or
subsequently amended State threshold for a Financial Interest Holder.
5. “Majority “means more than half. An equal number does not constitute a
Majority.
6. “Operator” means an Applicant that has been permitted and conducts or
conducted active cannabis operations in the City.
7. "Owner" means any of the following:
a. A Primary Principal
b. A Social Equity Owner
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c. Any person or entity engaged actively or passively in the direction,
control, or management of any Commercial Cannabis Business
d. If available evidence indicates that an individual qualifies as an
Owner, the City may notify the Applicant or licensee that it must either:
1) disclose the individual or entity as an Owner and submit written
acknowledgement that the Owner will be subject to the requirements
of the application and this Chapter 9.10; or, 2) produce a written
attestation under oath, along with any supporting documentation,
demonstrating that the individual does not qualify as an Owner.
8. “Principal(s)” means the individual(s), entities, and/or individual members of
any entity, identified as part of the Applicant team in the Commercial
Cannabis Operator Permit application.
9. “Primary Principal” means an individual or entity that has a 10% or greater
ownership interest, or has an immediately actionable entitlement to such
interest, in the Applicant business, Commercial Cannabis Business,
including, but not limited to partners, members, officers, directors, and
stockholders of every corporation, limited liability company, or general or
limited partnership that owns, or has an immediately actionable entitlement
to, at least 10% of the stock, capital, profits, voting rights, or membership
interest of the Commercial Cannabis Business or that is one of the partners
in the Commercial Cannabis Business. Managers of a Commercial Cannabis
Business with the authority to establish, modify or control operational and
policy directives and/or business operations plans for the business, whether
by means of ownership or contractual authority, shall also be considered
Primary Principals. On site retail managers without such autho rity shall be
considered employees and not Primary Principals.
10. “Responsible Party(ies)” shall be one or more individuals who have an
ownership interest in a Commercial Cannabis Activity and are designated to
be personally responsible for compliance with all terms and conditions of the
Commercial Cannabis Operator Permit, all other permits required by the
City, and all ordinances and regulations of the City. Any person having an
ownership interest of more than fifty percent in a Commercial Cannabis
Activity shall be designated a Responsible Party on the application. If no
individual owns more than fifty percent of a Commercial Cannabis Activity,
the individual owning the largest share shall be a Responsible Party, and if
multiple individuals have the same percentage interest, each one shall be a
Responsible Party. More than one individual can be designated a
Responsible Party.
11. “Social Equity Owner” means the Principal(s) of a Commercial Cannabis
Business with 2% equity or higher who earned at or below the median
household income at the time the Operator’s Commercial Cannabis
Operator Permit application was approved by the City.
12. “Cannabis Event” means a public or private event where compensation is
provided or exchanged, either directly or indirectly or as part of an admission
or other fee for service, for the provision, hosting, promotion or conduct of
the event where consumption of cannabis is part of the activities.
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SECTION 2. Section 9.10.070, subsections A, B, C, and D of the San Luis Obispo
Municipal Code are hereby amended as reflected in Exhibit A to read as follows:
A. Application. A person shall apply for a Commercial Cannabis Operator Permit
by submitting an application to the City during the annual application period.
The City Council will, by resolution, adopt criteria by which all applications will
be reviewed, applicants qualified and in the case of retail and cultivation
businesses, also ranked. Those applicants that are selected will have the
opportunity to apply for a use permit as outlined in Section 17.86.080. Each
application shall designate at least one Responsible Party. If a person is not
selected to receive a Commercial Cannabis Operator Permit, the person may
reapply during the next annual application period or any subsequent application
period established by the city manager except as otherwise prohibited by this
Chapter.
B. Application Submittal Timeframe. A person may only submit one application per
permit type, per application period, for a Commercial Cannabis Operator Permit,
during the annual application period designated by resolution of the city council
or any subsequent application period established by the city manager. An
Applicant who is unsuccessful in any application period may submit another
application in any subsequent application period, except as otherwise prohibited
by this Chapter. The Commercial Cannabis Operator Permit will be valid for
twelve months. Once a permit is activated, the Applicant can apply annually for
renewal. There is no guarantee that an Applicant will receive a Commercial
Cannabis Operator Permit in the first instance. Due to limitations on the number
of certain permits, even a highly ranked Applicant for a retail or cultivation permit
may not receive a Commercial Cannabis Operator Permit and even an Applicant
who receives a Commercial Cannabis Operator Permit is not guaranteed that
any subsequent, required land use permit, as outlined in Section 17.86.080, will
be approved.
C. Grounds for Automatic Disqualification.
In addition to any other reason that may be established by the City Council as a
basis for disqualification, an Applicant shall be disqualified from applying for, or
obtaining, a Commercial Cannabis Operator Permit if:
1. The Applicant fails to timely file an application during the annual application
period.
2. The Responsible Party refuses to sign the application and agree to be
personally responsible for compliance, and personally liable for failure to
comply, with the provisions of this chapter.
3. The Applicant, or any of its officers, directors or Owners, or any person listed
in the application, has been convicted of a felony or offense referenced in
Business and Professions Code Section 26057, or of any other crime related
to the application for or operation of a cannabis business; or has been
subject to fines, penalties, or sanctions for cultivation or production of a
controlled substance on public or private lands or for unauthorized
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commercial cannabis activities as specified in Business and Professions
Code Section 26057 or for any other criminal misconduct related to the
application for or operation of a cannabis business; or has been disqualified
from obtaining, or has had a commercial cannabis license suspended or
revoked by the state of California or any city or county in any state for
misconduct related to a cannabis business. The foregoing restrictions shall
apply within the five (5) years preceding the date the application is filed, and
for any additional period of time during which an Applicant is ineligible to
apply for a state cannabis license. No person who has been convicted of
such a felony or offense, or subject to such fines, penalties, sanctions,
disqualification, suspension or revocation of a cannabis permit or license,
may be engaged (actively or passively) in the application for, or operation,
management or ownership of any Commercial Cannabis Business. A
conviction within the meaning of this chapter means a plea or verdict of guilty
or a conviction or diversion following a plea of nolo contendere.
4. The Applicant made one or more false or misleading statements or
omissions in the application process. The foregoing shall result in immediate
notice of automatic disqualification of the application, an d/or revocation of
any permit issued to the Applicant as the result of the misleading statements
or omissions.
5. Any person listed on the application is a licensed physician making patient
recommendations for medical or medicinal cannabis pursuant to State l aw.
6. Any person listed in the application is less than twenty-one (21) years of age.
D. Duration and Activation of Permit. Each Commercial Cannabis Operator Permit
issued pursuant to this Chapter shall expire twelve (12) months after the date of
its activation. The permittee may apply for renewal prior to expiration in
accordance with this chapter. Each Commercial Cannabis Operator Permit must
be activated within twenty-four (24) months of issuance. The permit is activated
by the issuance of a use permit for the Commercial Cannabis Activity pursuant
to Chapter 17.86, together with all other applicable City permits and state
licenses, and the Commercial Cannabis Operator thereafter opening and
continuously operating the Commercial Cannabis Activity. Failure to timely
activate the permit shall be deemed abandonment of the permit and the permit
shall automatically lapse. In the event that a permit holder fails to timely activate
the permit and the permit lapses, the cannabis business shall be required to
submit a new application, unless otherwise prohibited from doing so under this
Chapter.
SECTION 3. Section 9.10.090, subsections D and E of the San Luis Obispo
Municipal Code are hereby amended as reflected in Exhibit A to read as follows:
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D. Notwithstanding the foregoing, upon finding, at any time following activation of
a permit and operation of a cannabis business, of any violation of criminal or
regulatory misconduct that would have precluded the issuance of a cannabis
permit or state license, or upon a finding that the Applicant or Owner provided
false or misleading information in the Commercial Cannabis Operator Permit
application that resulted in the issuance of any Operator permit, the permit and
right to operate a cannabis business shall be revoked immediately, subject to
appeal as set forth in Section 9.10.100(B).
E. Notwithstanding the foregoing, upon finding, at any time prior to activation of a
permit, of any violation of criminal or regulatory misconduct that would have
precluded the issuance of a cannabis permit or state license, or upon a finding
that the Applicant or Owner provided false or misleading information in the
Commercial Cannabis Operator Permit application that resulted in the issuance
of any Operator permit, the permit shall be revoked immediately, subject to
notice and informal appeal as set forth in Section 9.10.100(E).
SECTION 4. Section 9.10.100, subsection E of the San Luis Obispo Municipal
Code is hereby amended as reflected in Exhibit A to read as follows:
E. Revocation – Prior to Operator Permit Activation. A decision of the city to void,
nullify or terminate an Operator permit before the Operator permit has been
activated in accordance with 9.10.090(E), shall be the final action of the city
and not appealable, except as set forth in this Section. If the date of discovery
is prior to activation of the Operator permit, the Applicant shall be provided
notice of automatic disqualification and voidance/nullification/termination of the
Operator Permit and given an opportunity to respond to the determin ations in
writing and/or in an informal hearing before the City Manager, upon written
request within ten days following notification. The determination of the City
Manager shall be final with no further right of appeal.
SECTION 5. Section 9.10.120, subsection B, C, D, E, F, and G of the San Luis
Obispo Municipal Code are hereby amended as reflected in Exhibit A to read as follows:
B. Transfer or Assignment Prohibited. It shall be unlawful and a violation of this
Chapter to encumber, mortgage, lien, hypothecate, give, bequeath, sell, assign
or transfer, by operation of law or otherwise, any portion of the ownership ,
financial interest, or control of a Commercial Cannabis Business or a
Commercial Cannabis Operator Permit to any person who does not have a
Commercial Cannabis Operator Permit from the city. Prior to the effective date
of any transfer or other action described in this section. The Commercial
Cannabis Operator Permittee proposing such an action shall:
1. Notify the City in writing of the proposed action, comply with applicable
regulations and provide such information as the City reasonably requests
regarding the identity and qualifications of persons involved, and pay all
applicable fees and charges; and
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2. Provide proof that the proposed lender, lienholder, recipient, heir, buyer,
assignee, transferee, or other potential recipient of any portion of the
ownership or control, at the time of the notice and effective date of the
proposed action, is qualified by the City to apply for a Commercial Cannabis
Operator Permit and the proposed action is conditioned on the City issuing
to the person a new or amended Commercial Cannabis Operator Permit.
3. Notify the city in writing within ten (10) calendar days of the action becoming
final with the names and contact information of the new persons involved,
together with a request that the City issue either a new or amended
Commercial Cannabis Operator Permit, as applicable.
C. Three Year Moratorium on Majority Transfer of Ownership. Notwithstanding any
other provision of this subsection, for three years following the date on which
the Commercial Cannabis Business activates its Commercial Cannabis
Operator Permit in accordance with 9.10.070(D), no transfer of an aggregate
ownership interest of 50% or more in a Commercial Cannabis Operator Permit
will be permitted to any person or combination of persons who were not
Applicants, Owners or Financial Interest Holders of the permit at the time that
a Commercial Cannabis Operator Permit was awarded. This restriction shall
be cumulative, as to each Commercial Cannabis Operator Permit. No transfer
of any interest is permitted in a Commercial Cannabis Business prior to
activating the Commercial Cannabis Operator Permit is allowed.
D. Prohibition against obtaining ownership in more than one storefront cannabis
dispensary. Notwithstanding any other provision of this subsection, it shall be
unlawful and a violation of this Chapter for an Owner, permit holder, or Financial
Interest Holder of a commercial cannabis retail storefront in the City to be a
Owner, permit holder, or Financial Interest Holder in any other commercial
cannabis retail storefront in the City.
E. Prohibition against Social Equity Owner reductions. Notwithstanding any other
provision of this subsection, any transfer of ownership that will result in the
reduction or elimination of the total number of Social Equity Owners or
percentage interest of social equity ownership in a Commercial Cannabis
Business from the number or ownership percentage proposed in the original
Commercial Cannabis Operator Permit applications prohibited. This prohibition
shall include the internal transfer of ownership from one currently permitted
Operator to another, and transfers of Social Equity Owner interests of any kind
require both prior notice and approval of the City to verify compliance with this
section.
F. Owner and Financial Interest Disclosure. Notwithstanding any other provision
of this subsection, all Owners and Financial Interest Holders in any Commercial
Cannabis Business shall be disclosed to the City in the application for the
Operator permit. Any changes to Commercial Cannabis Business Owners or
Financial Interest Holders shall be disclosed to the City when notification is
given to the State.
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G. Assignment Null and Void. Any attempt to transfer, sell, assign, give, or lien, or
any transfer, by operation of law or otherwise, or any failure to disclose
information as required by this Chapter, is prohibited and a violation of this
Chapter, subject to such penalties provided under this Chapter or as otherwise
provided for violation of the Municipal Code. Any completed transfer, sale,
assignment, gift, or lien, of a Commercial Cannabis Operator Permit issued
pursuant to the Chapter, is prohibited. Any such action immediately shall void,
nullify and/or terminate the Commercial Cannabis Operator Permit, which shall
be of no further force or effect as of the date of any prohibited transfer, sale,
assignment, gift or lien.
SECTION 6. Section 9.10.140, subsection D of the San Luis Obispo Municipal
Code is hereby amended as reflected in Exhibit A to read as follows:
D. Violation and enforcement anytime during application and permitting process .
Notwithstanding any initial verification of compliance of the Commercial
Cannabis Operator Permit application and commercial cannabis activity with
the provisions of this Chapter, any Commercial Cannabis Business later found
to be in violation of any of the requirements of this Chapter at any time during,
throughout and after the application and permitting process is subject to the
enforcement provisions provided in this chapter.
SECTION 7. Ordinance No. 1691 (2021 Series) is hereby amended and
superseded to the extent inconsistent herewith.
SECTION 8. Environmental Review. The California Environmental Quality Act
(CEQA) does not apply to the recommended action in this repot because the action does
not constitute a “Project” under CEQA Guidelines Sec. 15378. The adoption of the
cannabis regulatory changes is an administrative activity of a government agency that will
not result in direct or indirect physical impact on the environment.
SECTION 9. Severability. If any subdivision, paragraph, sentence, clause, or
phrase of this Ordinance is, for any reason, held to be invalid or unenforceable by a court
of competent jurisdiction, such invalidity or unenforceability shall not affect the validity or
enforcement of the remaining portions of this Ordinance, or any other provisions of the
city' s rules and regulations. It is the city' s express intent that each remaining portion
would have been adopted irrespective of the fact that any one or more subdivisions,
paragraphs, sentences, clauses, or phrases be decla red invalid or unenforceable.
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SECTION 10. A summary of this ordinance, together with the names of Council
members voting for and against, shall be published at least five (5) days prior to its final
passage, in The Tribune, a newspaper published and circulated in this City. This
ordinance shall go into effect at the expiration of thirty (30) days after its final passage.
INTRODUCED on the _____ day of _________ 2022, AND FINALLY ADOPTED
by the Council of the City of San Luis Obispo on the ____ day of ________, 2022, on the
following vote:
AYES:
NOES:
ABSENT:
___________________________
Mayor Erica A. Stewart
ATTEST:
_______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington
City Clerk
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Exhibit A
Chapter 9.10 Cannabis Regulations
9.10.010 Purpose and Intent.
9.10.020 Definitions
9.10.030 Personal Cultivation Limited
9.10.040 Commercial Cannabis/City Permit and State License Required
9.10.050 Regulations and Fees
9.10.060 Display and Production of Permits
9.10.070 Commercial Cannabis Operator Permit Application Procedures and
Requirements.
9.10.080 Renewal of Permit
9.10.090 Suspension or Revocation of Permit
9.10.100 Appeal
9.10.110 Right to Occupy and Use Property for Commercial Cannabis Activity
9.10.120 Prohibition on Transfer of Commercial Cannabis Operator Permits.
9.10.130 Records and Reporting.
9.10.140 Inspection and Enforcement.
9.10.150 Outdoor Commercial Cannabis Cultivation and Activities Prohibited
9.10.160 Indemnification, Insurance, Reimbursement, Consent
9.10.170 Compliance with Laws
9.10.180 Permit Violation
9.10.190 Permit Compliance Monitoring
9.10.200 Permit Holder Responsible for Violations by Employees or Agents
9.10.210 Consumption or Use Prohibited On-site and In Public
9.10.220 Concurrent Alcohol Sales or Service Prohibited
9.10.230 Minors
9.10.240 Sale of Cannabis, Cannabis Products or Cannabis Accessories by Vending
Machine prohibited
9.10.250 Security Measures
9.10.260 Limitations on City’s Liability.
9.10.270 Fees Deemed Debt to City
9.10.280 Violation and Penalties
9.10.290 Severability
9.10.010 Purpose and Intent.
A. It is the primary purpose and intent of this Chapter to protect the health, safet y, and
welfare of the residents of the City of San Luis Obispo from the negative impacts of
illegal commercial and non-commercial cannabis activity, and of state authorized
cannabis activity, by enforcing City ordinances, rules and regulations consistent w ith
applicable State law, including, but not limited to, the Compassionate Use Act, the
Medical Marijuana Program Act, the Adult Use of Marijuana Act, and the Medicinal
and Adult Use of Cannabis Regulatory and Safety Act.
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B. This Chapter is not intended to, and shall not be construed to, prohibit or interfere with
any right, defense or immunity under Health and Safety Code Section 11362.5 (the
Compassionate Use Act), or under Health and Safety Code Section 11362.7 et. seq.
(the Medical Marijuana Program Act).
C. This Chapter is not intended to, and shall not be construed to, prohibit or interfere with
any right, defense or immunity of any person 21 years of age or older relating to the
adult personal possession or cultivation of cannabis or marijuana consistent with the
provisions of the Control, Regulate and Tax Adult Use of Marijuana Act, and the
Medicinal and Adult Use of Cannabis Regulatory and Safety Act.
D. Nothing in this Chapter shall be construed to authorize the cultivation, possession or
use of marijuana for any purpose inconsistent with state or local law.
E. Any reference to California statutes includes any regulations promulgated thereunder
and is deemed to include any successor or amended version of the referenced statute
or regulation.
9.10.020 Definitions
A. State defined terms. Words or terms used in this chapter that are defined words or
terms in Business and Professions Code Section 26001, or Health and Safety Code
Section 11362.7 (the Statutes”) shall have the meanings ascribed t o them in the
Statutes as they now read, or as they may be amended to read. These state defined
words and terms include, but are not limited to, “cannabis,” “cannabis accessories,”
“cannabis concentrate,” “cannabis products,” “commercial cannabis activity,”
“cultivation,” “delivery,” “distribution,” “license,” “live plants,” “manufacture,”
“operation,” “person,” “premises,” “sell,” “sale,” “to sell.” Some of these terms are also
set forth in Chapter 17.156 of this code. In the event of conflict in the defin itions, the
definitions in Chapter 17.156 shall control; provided the terms defined in subsection B
below shall control over any other definition.
B. City defined terms. The following words or terms used in this chapter have the
following meanings:
1. “Applicant” means the individual or entity applying for a Commercial Cannabis
Business Operator Permit, including each entity or individual identified as part
of the Applicant team or who is an Owner or Principal of an entity applying for
a Permit.
2. “Commercial Cannabis Business” means any person or entity engaging in any
business, operation or activity which is Commercial Cannabis Activity under
state law in the City.
3. “Commercial Cannabis Operator Permit” means a permit required by the City
of San Luis Obispo pursuant to this chapter to conduct Commercial Cannabis
Activity or a Commercial Cannabis Business in the City.
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4. “Financial Interest Holder” means a person or entity (other than a Social Equity
Owner) who has less than a 10% aggregate ownership interest in the
Commercial Cannabis Business, has no active or passive direction, control, or
management of the Commercial Cannabis Business, and otherwise meets the
definitions of Financial Interest Holder as set forth in the Department of
Cannabis Control Medicinal and Adult-Use Commercial Cannabis Regulations
California Code of Regulations Title 4 Division 19. Department of Cannabis
Control. For purposes this Chapter, the aggregate ownership threshold herein
shall supersede any current (20%) or subsequently amended S tate threshold
for a Financial Interest Holder.
5. “Majority “means more than half. An equal number does not constitute a
Majority.
6. “Operator” means an Applicant that has been permitted and conducts or
conducted active cannabis operations in the City.
7. "Owner" means any of the following:
a. A Primary Principal
b. A Social Equity Owner
c. Any person or entity engaged actively or passively in the direction,
control, or management of any Commercial Cannabis Business
d. If available evidence indicates that an individual qualifies as an Owner,
the City may notify the Applicant or licensee that it must either: 1)
disclose the individual or entity as an Owner and submit written
acknowledgement that the Owner will be subject to the requirements of
the application and this Chapter 9.10; or, 2) produce a written attestation
under oath, along with any supporting documentation, demonstrating
that the individual does not qualify as an Owner.
8. “Principal(s)” means the individual(s), entities, and/or individual members of
any entity, identified as part of the Applicant team in the Commercial Cannabis
Operator Permit application.
9. “Primary Principal” means an individual or entity that has a 10% or greater
ownership interest, or has an immediately actionable entitlement to such
interest, in the Applicant business, Commercial Cannabis Business, including,
but not limited to partners, members, officers, directors, and stockholders of
every corporation, limited liability company, or general or limited partnership
that owns, or has an immediately actionable entitlement to, at least 10% of the
stock, capital, profits, voting rights, or membership interest of the Commercial
Cannabis Business or that is one of the partners in the Commercial Cannabis
Business. Managers of a Commercial Cannabis Business with the authority to
establish, modify or control operational and policy directives and/or business
operations plans for the business, whether by means of ownership or
contractual authority, shall also be considered Primary Principals. On site retail
managers without such authority shall be considered employees and not
Primary Principals.
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10. “Responsible Party(ies)” shall be one or more individuals who have an
ownership interest in a Commercial Cannabis Activity and are designated to be
personally responsible for compliance with all terms and conditions of the
Commercial Cannabis Operator Permit, all other permits required by the City,
and all ordinances and regulations of the City. Any person having an ownership
interest of more than fifty percent in a Commercial Cannabis Activity shall be
designated a Responsible Party on the application. If no individual owns more
than fifty percent of a Commercial Cannabis Activity, the individual owning the
largest share shall be a Responsible Party, and if multiple individuals have the
same percentage interest, each one shall be a Responsible Party. More than
one individual can be designated a Responsible Party.
11. “Social Equity Owner” means the Principal(s) of a Commercial Cannabis
Business with 2% equity or higher who earned at or below the median
household income at the time the Operator’s Commercial Cannabis Operator
Permit application was approved by the City.
12. “Cannabis Event” means a public or private event where compensation is
provided or exchanged, either directly or indirectly or as part of an admission
or other fee for service, for the provision, hosting, promotion or conduct of the
event where consumption of cannabis is part of the activities.
9.10.030 Personal Cultivation Limited
A. Maximum Six Plants Outdoors Per Parcel. It shall be unlawful for any person to plant,
cultivate, harvest, dry, process, maintain, possess or store outdoors, more than six (6)
live cannabis plants on any parcel containing one or more private residences. This
limitation on outdoor personal cannabis activities applies per parcel, regardless of the
number of residents in each private residence, and regardless of the number of
residences on the parcel. This limitation applies to cannabis live plants for either adult
recreational use or medicinal purposes. Outdoor personal cultivation shall comply with
applicable provisions of chapter 17.86.080 of this Code.
B. Maximum Six Plants Per Private Residence, Indoors and Outdoors. It shall be unlawful
for the cumulative total of cannabis plants per private residence, indoors and outdoors,
to exceed six (6) cannabis live plants, regardless of number of persons residing in the
private residence. This limitation applies to cannabis live plants for either adult
recreational use or medicinal purposes. Any live cannabis plants grown indoors shall
comply with applicable provisions of Chapter 17.86.080 of this Code.
C. No Outdoor Cultivation on Parcel without Private Residence . It shall be unlawful for
any person to plant, cultivate, harvest, dry, process, maintain, possess or store any
cannabis live plants outdoors on a parcel that does not have a private residence used
for residential dwelling purposes by the person cultivating the cannabis live plants.
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D. Neighborhood Impacts of Personal Cultivation. There shall be no exterior evidence of
cannabis cultivation occurring at the property visible by normal unaided vision from a
public place or the public right-of-way and any outdoor cultivation shall comply with
provisions of Chapter 17.86.080(D) of this code. Personal cultivation of cannabis, for
recreational adult use or for medicinal purposes, shall not create odors, dust, heat,
noise, light, glare smoke or other impacts to people of normal sensitivity living, working
or lawfully present in the vicinity of the personal cultivation site. Impacts that cross the
nearest property line of any other parcel, beyond that parcel on which the personal
cultivation is conducted, or that are visible or noticeable with normal unaided vision,
from a public place or the public right of way, or from any separately owned, leased
or controlled private residence or business on the same parcel as the private
residence responsible for the personal cultivation, are unlawful.
E. No Hazardous Personal Cultivation. Personal cultivation, harvesting, drying, or
processing of cannabis, for recreational adult use or medicinal purposes, that uses or
stores hazardous or toxic chemicals or materials, creates hazardous or toxic products
or wastes, or uses volatile processes or other methods or substances that pose a
significant risk to public health or safety, is prohibited and unlawful.
9.10.040 Commercial Cannabis/City Permit and State License Required
A. City Commercial Cannabis Operator Permit Required. No person shall engage in
Commercial Cannabis Activity or have an ownership interest in, operate, or manage,
a Commercial Cannabis Business without obtaining and continuously maintaining a
Commercial Cannabis Operator Permit pursuant to this chapter.
B. Commercial Cannabis Operator Permit and State License(s) Required. It shall be
unlawful for any person to own, conduct, manage, operate, engage or participate in,
work or volunteer at a Commercial Cannabis Activity or Commercial Cannabis
Business that does not have a valid Commercial Cannabis Operator’s Permit issued
pursuant to this chapter and other City permits or licenses required by this Code, in
addition to the appropriate license(s) required by state law to conduct the Commercial
Cannabis Activity. Any Commercial Cannabis Business or Commercial Cannabis
Activity conducted without all required City and state permits and licenses is prohibited
and unlawful and is hereby declared to be a public nuisance.
9.10.050 Regulations and Fees.
The City Council shall by resolution or ordinance adopt such forms, fees, regulations and
procedures as are necessary to implement this Chapter with respect to the application
and qualification for, and the selection, future selection, investigation, process, issuance,
renewal, revocation, and suspension of, Commercial Cannabis Operator Permits.
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9.10.060 Display and Production of Permits
A. Dual Permits Posted and Visible. A copy of the Commercial Cannabis Operator Permit
issued by the City of San Luis Obispo pursuant to this Chapter, to gether with a copy
of the appropriate state license(s) for the Commercial Cannabis Activity being
conducted, shall be posted and readily visible to the public at all times, at each location
where Commercial Cannabis Activity occurs.
B. Production of Originals for Inspection. Any Owner, Operator , employee or person in
charge of a Commercial Cannabis Activity shall produce for inspection and copying,
upon request of a City inspector, code enforcement officer, or City police officer during
normal operating hours, the original of the current and va lid City of San Luis Obispo
Commercial Cannabis Operator Permit and the appropriate, current and valid
license(s) of the State of California for the Commercial Cannabis Activity(ies) or
Commercial Cannabis Business(es) being conducted.
9.10.070 Commercial Cannabis Operator Permit Application Procedures and
Requirements
A. Application. A person shall apply for a Commercial Cannabis Operator Permit by
submitting an application to the City during the annual application period. The City
Council will, by resolution, adopt criteria by which all applications will be reviewed,
applicants qualified and in the case of retail and cultivation businesses, also ranked.
Those applicants that are selected will have the opportunity to apply for a use permit
as outlined in Section 17.86.080. Each application shall designate at least one
Responsible Party. If a person is not selected to receive a Commercial Cannabis
Operator Permit, the person may reapply during the next annual application period or
any subsequent application period established by the city manager except as
otherwise prohibited by this Chapter.
B. Application Submittal Timeframe. A person may only submit one application per permit
type, per application period, for a Commercial Cannabis Operator Permit, during the
annual application period designated by resolution of the city council or any
subsequent application period established by the city manager. An Applicant who is
unsuccessful in any application period may submit another application in any
subsequent application period, except as otherwise prohibited by this Chapter. The
Commercial Cannabis Operator Permit will be valid for twelve months. Once a permit
is obtained activated, the Applicant can apply annually for renewal. There is no
guarantee that an Applicant will receive a Commercial Cannabis Operator Permit in
the first instance. Due to limitations on the number of certain permits, even a highly
ranked Applicant for a retail or cultivation permit may not receive a Commercial
Cannabis Operator Permit and even an Applicant who receives a Commercial
Cannabis Operator Permit is not guaranteed that any subsequent, required land use
permit, as outlined in Section 17.86.080, will be approved.
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C. Grounds for Automatic Disqualification.
In addition to any other reason that may be established by the City Council as a basis
for disqualification, an Applicant shall be disqualified from applying for, or obtaining, a
Commercial Cannabis Operator Permit if:
1. The Applicant fails to timely file an application during the an nual application
period.
2. The Responsible Party refuses to sign the application and agree to be
personally responsible for compliance, and personally liable for failure to
comply, with the provisions of this chapter.
3. The Applicant, or any of its officers, d irectors or Owners, or any person listed
in the application, has been convicted of a felony or offense referenced in
Business and Professions Code Section 26057, or of any other crime related
to the application for or operation of a cannabis business; or has been subject
to fines, penalties, or sanctions for cultivation or production of a controlled
substance on public or private lands or for unauthorized commercial cannabis
activities as specified in Business and Professions Code Section 26057 or for
any other criminal misconduct related to the application for or operation of a
cannabis business; or has been disqualified from obtaining, or has had a
commercial cannabis license suspended or revoked by the state of California
or any city or county in any state for misconduct related to a cannabis business.
The foregoing restrictions shall apply within the three five (5) years preceding
the date the application is filed, and for any additional period of time during
which an Applicant is ineligible to apply for a state cannabis license. No person
who has been convicted of such a felony or offense, or subject to such fines,
penalties, sanctions, disqualification, suspension or revocation of a cannabis
permit or license, may be engaged (actively or passively) in the application for,
or operation, management or ownership of any Commercial Cannabis
Business. A conviction within the meaning of this chapter means a plea or
verdict of guilty or a conviction or diversion following a plea of nolo contendere.
4. The Applicant made one or more false or misleading statements or omissions
in the application process. The foregoing shall result in immediate notice of
automatic disqualification of the application, and/or revocation of any permit
issued to the Applicant as the result of the misleading statements or omissions.
5. Any person listed on the application is a licensed physician making patient
recommendations for medical or medicinal cannabis pursuant to State law.
6. Any person listed in the application is less than twenty-one (21) years of age.
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D. Duration and Activation of Permit. Each Commercial Cannabis Operator Permit issued
pursuant to this Chapter shall expire twelve (12) months after the date of its activation.
The permittee may apply for renewal prior to expir ation in accordance with this
chapter. Each Commercial Cannabis Operator Permit must be activated within 12
twenty-four (24) months of issuance. The permit is activated by the issuance of a use
permit for the Commercial Cannabis Activity pursuant to Chapter 17.86.080, together
with all other applicable City permits and state licenses, and the Commercial Cannabis
Operator thereafter opening and continuously operating the Commercial Cannabis
Activity. Failure to timely activate the permit shall be deemed abandonment of the
permit and the permit shall automatically lapse. In the event that a permit holder fails
to timely activate the permit and the permit lapses, the cannabis business shall be
required to submit a new application, unless otherwise prohibited from doing so under
this Chapter.
9.10.080 Renewal of Permit
A. Renewal Application Filing Deadline. An application for renewal of a Commercial
Cannabis Operator Permit shall be filed at least sixty (60) calendar days, but not more
than one hundred twenty (120) calendar days, prior to the expiration date of the permit
with the City Manager or his/her designee. If the complete appl ication and fees are
timely submitted but the City does not act to approve or reject the renewal prior to
expiration, the permittee may continue to operate under the expired permit until the
City approves or rejects the application for renewal.
B. Rejection of Renewal Application. An application for renewal of a Commercial
Cannabis Operator Permit shall be rejected if any of the following exists.
1. The Commercial Cannabis Operator Permit is revoked at the time of the
application or renewal.
2. The Applicant conducted unpermitted commercial cannabis activities in the City
or continued to conduct formerly permitted commercial cannabis activities after
expiration of the permit, other than as expressly permitted by this section.
3. Any of the grounds for disqualification for prequalification set forth in Section
9.10.070(C) above, or as established by the City Council, exist at the time of
application for renewal, or date of renewal.
4. The permittee fails to renew any required State of California license(s), or the
State revokes or suspends the license. Revocation, termination, non-issuance
or suspension of a license issued by the State of California, or any of its
departments or divisions, shall immediately, concurrently revoke, terminate, or
suspend, respectively, the Commercial Cannabis Operator Permit. Such
automatic suspension makes it illegal for a Commercial Cannabis Business or
Activity to operate within the City of San Luis Obispo until the State of California,
or its respective department or division, reinstates or issues the State license.
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An application for renewal of a Commercial Cannabis Operator Permit may be denied if
any of the following exists:
1. The application is filed less than sixty (60) days before its expiration.
2. The Applicant has received an administrative citation for violating any provision
of this Code relating to its Commercial Cannabis Activity(ies) in the City during
the last twelve months, and the administrative citation has not been resolved in
the Applicant’s favor by date of application for renewal. A pending, unresolved
appeal of an administrative citation shall not result in rejection of an otherwise
timely and complete application, but resolution of an appeal in a manner that
upholds the violation against the Applicant during the application review period
shall result in the immediate rejection of the application.
3. The Commercial Cannabis Business has not been in regular and continuous
operation in the three (3) months immediately prior to the renewal application.
4. The Commercial Cannabis Business fails to conform to the requirements of this
Chapter, any regulations adopted pursuant to this Chapter or the conditions
imposed as part of any Use Permit or zoning requirements under Chapter
17.86.080 of this Code.
5. The Commercial Cannabis Operator Permit is suspended at the time of
application or renewal.
C. Effect of Rejection of Application for Renewal. Operations to Cease Pending Appeals.
If a renewal application is rejected, the Commercial Cannabis Operator Permit expires
on the expiration date set forth in the permit, even if an appeal has been filed. All
commercial cannabis activities in the City under the expired permit must stop until all
appeals have been exhausted. A person or entity whose renewal application is
rejected, and loses his/her/its appeal, must go through the annual Commercial
Cannabis Business Operator Permit application process.
9.10.090 Suspension or Revocation of Permit.
In addition to any other penalty authorized by law, a Commercial Cannabis Operator
Permit may be suspended or revoked if the City finds, after notice to the permittee and
opportunity to be heard, that the permittee or his or her agents or employees has violated
any condition of the permit imposed pursuant to, or any provision of, this chapter.
A. Upon a finding by the City of a first permit violation within any five -year period,
the permit shall be suspended for thirty days.
B. Upon a finding by the City of a second permit violation within any five -year
period, the permit shall be suspended for ninety days.
C. Upon a finding by the City of a third permit violation within any five -year period,
the permit shall be revoked.
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D. Notwithstanding the foregoing, upon finding, at any time following activation of
a permit and operation of a cannabis business, of any violatio n of criminal or
regulatory misconduct that would have precluded the issuance of a cannabis
permit or state license, or upon a finding that the Applicant or Owner provided
false or misleading information in the Commercial Cannabis Operator Permit
application that resulted in the issuance of any Operator permit, the permit and
right to operate a cannabis business shall be revoked immediately, subject to
notice and informal appeal as set forth in Section 9.10.100(B).
E. Notwithstanding the foregoing, upon finding, at any time prior to activation of a
permit, of any violation of criminal or regulatory misconduct that would have
precluded the issuance of a cannabis permit or state license, or upon a finding
that the Applicant or Owner provided false or misleading information in the
Commercial Cannabis Operator Permit application that resulted in the issuance
of any Operator permit, the permit shall be revoked immediately, subject to
appeal as set forth in Section 9.10.100(E).
9.10.100 Appeal.
A. Qualification. Ranking of Retailers and Cultivators. A decision of the City to not qualify
an Applicant for a Commercial Cannabis Operator Permit, or to rank applicants for
retail or cultivation licenses, or to allow qualified applicants with the highest r ankings
the first opportunity to apply for a Commercial Cannabis Operator Permit, shall be the
final action of the City and not appealable.
B. Non-renewal, Revocation or Suspension. A decision of the City to reject an application
for renewal, or to revoke or suspend a Commercial Cannabis Operator Permit, is
appealable to the City Manager. An appeal must be filed with the City Manager within
ten working days after the renewal has been denied, suspended or revoked. A
decision of the City Manager or his or her designee is appealable to the City Council
in accordance with Chapter 1.20 of this Code.
C. Effect of Suspension. During a period of license suspension, the Commercial
Cannabis Business shall remove from public view, all cannabis and cannabis
products, and shall not conduct any Commercial Cannabis Activity.
D. Revocation. Notice to State. Pursuant to Business and Profession Code Section
26200 (c), the City Manager or his or her designee shall promptly notify the Bureau of
Cannabis Control within the Department of Consumer Affairs, upon City’s revocation
of any local license, permit, or authorization for a state licensee to engage in
commercial cannabis activity within the City.
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E. Revocation – Prior to Operator Permit Activation. A decision of the city to void, nullify
or terminate an Operator permit before the Operator permit has been activated in
accordance with 9.10.090(E), shall be the final action of the city and not appealable ,
except as set forth in this Section. If the date of discovery is prior to activation of the
Operator permit, the Applicant shall be provided notice of automatic disqualification
and voidance/nullification/termination of the Operator Permit and given an o pportunity
to respond to the determinations in writing and/or in an informal hearing before the
City Manager, upon written request within ten days following notification. The
determination of the City Manager shall be final with no further right of appeal.
9.10.110 Right to Occupy and to Use Property for Commercial Cannabis Activity.
As a condition precedent to the City’s issuance of a Commercial Cannabis Operator
Permit pursuant to this Chapter, any person intending to open and operate a Commercial
Cannabis Business shall provide evidence satisfactory to the City of the Applicant’s legal
right to occupy and to use the proposed location for the proposed use, together with the
approval of a use permit from the City for cannabis activity at the location. In the event
the proposed location is owned by or to be leased from another person, the Applicant for
a permit under this Chapter shall provide a signed and notarized statement from the
property Owner agreeing to the operation of a Commercial Cannabis Business on the
property.
9.10.120 Prohibition on Transfer of Commercial Cannabis Operator Permits.
A. Business Restriction to Location on Permit. It shall be unlawful for any person to
transfer a Commercial Cannabis Operator Permit to a location not specified on the
permit, or to operate a Commercial Cannabis Business at any place or location other
than that identified on the Commercial Cannabis Operator Permit issued pursuant to
this Chapter.
B. Transfer or Assignment Prohibited. It shall be unlawful and a violation of this Chapter
to encumber, mortgage, lien, hypothecate, give, bequeath, sell, assign or transfer, by
operation of law or otherwise, any portion of the ownership , financial interest, or
control of a Commercial Cannabis Business or a Commercial Cannabis Operator
Permit to any person who does not have a Commercial Cannabis Operator Permit
from the city. Pprior to the effective date of any transfer or other action described in
this section,. T the commercial cannabis Operator permittee proposing such an action
shall:
1. Notify the City in writing of the proposed action, comply with applicable
regulations and provide such information as the City reasonably requests
regarding the identity and qualifications of persons involved, and pay all
applicable fees and charges; and
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2. Provide proof that the proposed lender, lienholder, recipient, heir, buyer,
assignee, transferee, or other potential recipient of any portion of the ownership
or control, at the time of the notice and effective date of the proposed acti on, is
qualified by the City to apply for a Commercial Cannabis Operator Permit and
the proposed action is conditioned on the City issuing to the person a new or
amended Commercial Cannabis Operator Permit.
3. Notify the city in writing within ten (10) calendar days of the action becoming
final with the names and contact information of the new persons involved,
together with a request that the City issue either a new or amended Commercial
Cannabis Operator Permit, as applicable.
C. Three Year Moratorium on Majority Transfer of Ownership. Notwithstanding any other
provision of this subsection, for three years following the date on which the
Commercial Cannabis Business activates its Commercial Cannabis Operator Permit
in accordance with 9.10.070(D), no transfer of an aggregate ownership interest of 50%
or more in a Commercial Cannabis Operator Permit will be permitted to any person or
combination of persons who were not Applicants, Owners or Financial Interest Holders
of the permit at the time that a Commercial Cannabis Operator Permit was awarded.
This restriction shall be cumulative, as to each Commercial Cannabis Operator Permit.
No transfer of any interest is permitted in a Commercial Cannabis Business prior to
activating the Commercial Cannabis Operator Permit is allowed.
D. Prohibition against obtaining ownership in more than one storefront cannabis
dispensary. Notwithstanding any other provision of this subsection, it shall be unlawful
and a violation of this Chapter for an Owner, permit holder, or Financial Interest Holder
of a commercial cannabis retail storefront in the City to be a Owner, permit holder, or
Financial Interest Holder in any other commercial cannabis retail storefront in the City.
E. Prohibition against Social Equity Owner reductions. Notwithstanding any other
provision of this subsection, any transfer of ownership that will result in the reduction
or elimination of the total number of Social Equity Owners or percentage interest of
social equity ownership in a Commercial Cannabis Business from the number or
ownership percentage proposed in the original Commercial Cannabis Operator Permit
applications prohibited. This prohibition shall include the internal transfer of ownership
from one currently permitted Operator to another, and transfers of Social Equity Owner
interests of any kind require both prior notice and approval of the City to verify
compliance with this section.
F. Owner and Financial Interest Disclosure. Notwithstanding any other provision of this
subsection, all Owners and Financial Interest Holders in any Commercial Cannabis
Business shall be disclosed to the City in the application for the Operator permit. Any
changes to Commercial Cannabis Business Owners or Financial Interest Holders shall
be disclosed to the City when notification is given to the State.
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G.C Assignment Null and Void. Any attempt to transfer, sell, assign, give, or lien, or any
transfer, sale, assignment, gift or lien, of a Commercial Cannabis Operator Permit
issued pursuant to this Chapter, by operation of law or otherwise, or any failure to
disclose information as required by this Chapter, is prohibited and a in violation of this
cChapter, is prohibited subject to such penalties provided under this Chapter or as
otherwise provided for violation of the Municipal Code. Any completed transfer, sale,
assignment, gift, or lien, of a Commercial Cannabis Operator Permit issued pursuant
to the Chapter, is prohibited. Any such action immediately shall voids, nullifyies and/or
terminates the Commercial Cannabis Operator Permit, which shall be of no further
force or effect as of the date of any prohibited transfer, sale, assignment, gift or lien .
9.10.130 Records and Reports.
A. City Access to Records. Subject to the Health Insurance Portability and Accountability
Act (HIPAA) regulations, each Commercial Cannabis Business shall allow City of San
Luis Obispo officials to have access to the Commercial Cannabis Business’s books,
records, accounts, and any and all data relevant to its permitted activities for the
purpose of conducting an audit, examination or inspection. Books, records, accounts,
and any and all relevant data will be produced no later than twenty -four (24) hours
after receipt of the City’s request or within a reasonable time as authorized in writing
by the City.
B. Annual Audit. Each Commercial Cannabis Business shall file with the City Manager
or his/her designee an audit of its financial operations for the previous fiscal year,
complete and certified by an independent certified public accountant in accordance
with generally accepted auditing and accounting principles. The audit shall include
but not be limited to a discussion, analysis, and verification of each of the records
required to be maintained pursuant to this Chapter. The information contained in the
audit shall be made available in standard electronic format which shall be compatible
with programs and software used by the City, and which can easily be imported into
either Excel, Access or any other contemporary software designated by the City
Manager.
C. Inventory Control system. All Commercial Cannabis Businesses shall maintain an
inventory control and reporting system that accurately documents the present location,
amounts, and descriptions of all cannabis and cannabis products for all stages of the
growing and production or manufacturing, laboratory testing and distribution
processes until sold or distributed. All Commercial Cannabis Businesses shall
maintain records of all sales or transfers of cannabis and cannabis products.
D. Employee Registry. Each Owner and/or Operator of a Commercial Cannabis Business
shall maintain a current register of the names and the contact information (including
the name, address, and telephone number) of all employees currently employed by
the Commercial Cannabis Business and shall disclose such register to any City of San
Luis Obispo official upon request.
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E. Reporting and Tracking of Product and of Gross Sales. Each Commercial Cannabis
Business shall have in place a point-of-sale tracking system to track and to report on
all aspects of the Commercial Cannabis Business including, but not limited to, such
matters as cannabis tracking, inventory data, and gross sales (by weight and by sale)
and shall ensure that such information is compatible with the City’s record-keeping
systems. The system must have the capability to produce historical transactional data
for review by the City of San Luis Obispo. All information provided to the City pursuant
to this sub-Chapter shall be confidential and shall not be disclosed, except as may
otherwise be required under law.
F. Maintenance of Records. All records required by this Chapter shall be maintained by
the Commercial Cannabis Business for a period of not less than seven (7) years and
shall otherwise keep accurate records of all Commercial Cannabis Business activity
and provide such records for inspection consistent with this Code or any rules the City
Council by resolution or ordinance.
9.10.140 Inspection and Enforcement.
A. Unscheduled Inspection during Business Hours. The City Manager or his/her
designee and any other City of San Luis Obispo official or inspector charged with
enforcing any provisions of this Code, may enter a Commercial Cannabis Business at
any time during the hours of operation without notice for the purpose of inspecting the
Commercial Cannabis Business for compliance with the provisions of this Code, the
terms and conditions of the Commercial Cannabis Operator Permit or any other City
permit or state license, including inspection of the recordings and records maintained
pursuant to this Chapter or the applicable provisions of State law. The right to inspect
under this inspection includes the right to copy recordings and records.
B. Interference with Inspection. It is unlawful for any person who owns, operates,
manages or is employed by, or has any responsibility over the operation of, a
Commercial Cannabis Business, to refuse to allow, or to impede, obstruct, or interfere
with, an inspection by the City, or the City’s review or copying of recordings (including
audio and video recordings) and records, or to conceal, destroy, alter or falsify any
recordings or records.
C. Obtaining Samples. The City Manager or his/her designee or any other person
charged with enforcing the provisions of this Chapter may enter the location of a
Commercial Cannabis Business at any time during the hours of operation and without
notice to obtain samples of cannabis and cannabis products to test for law
enforcement and/or public safety purposes. Any samples obtained by the City of San
Luis Obispo shall be logged, recorded, and maintained in accordance with City of San
Luis Obispo Police Department standards for evidence. At all other times, the City
Manager or his/her designee may enter the location of a Commercial Cannabis
Business to obtain samples of cannabis upon reasonable notice, as otherwise
authorized by law or pursuant to a warrant.
Page 155 of 161
Ordinance No. _____ (2022 Series) Page 24
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D. Violation and enforcement anytime during application and permitting process.
Notwithstanding any initial verification of compliance of the Commercial Cannabis
Operator Permit application and commercial cannabis activity with the provisions of
this Chapter, any Commercial Cannabis Business later found to be in violation of any
of the requirements of this Chapter at any time during, throughout and after the
application and permitting process is subject to the enforcement provisions provided
in this chapter.
9.10.150 Outdoor Commercial Cannabis Cultivation and Activities Prohibited.
A. Outdoor Commercial Cultivation prohibited. Outdoor commercial cannabis cultivation,
including, but not limited to, cultivation in greenhouses, hoop structures, and by mixed
light (part daylight/part artificial light), is prohibited and unlawful. This section prohibits
all outdoor commercial cannabis cultivation, including cultivation for profit or not for
profit cultivation, and including commercial cultivation for adult recreational use o r
medicinal purposes. For purposes of this section, outdoor cultivation of cannabis by
cooperatives is prohibited. All commercial cannabis cultivation shall be conducted only
inside a fully enclosed structure by a person or entity with a Commercial Cannab is
Operator Permit, a City use permit, and appropriate State license(s). See also Section
17.86.080(E)(6)(C)99.050 G 3 of this Code.
B. Outdoor Commercial Cannabis Activities Prohibited. Outdoor storage, harvesting,
drying, processing, or manufacturing of commercial cannabis or cannabis products is
prohibited and unlawful.
9.10.160 Indemnification, Insurance, Reimbursement, Consent.
As a condition of approval of any Commercial Cannabis Operator Permit issued pursuant
to this Chapter, the permittee shall, at a minimum:
A. Execute an agreement to protect, indemnify, defend (at its sole cost and expense with
counsel approved by City), and hold the City of San Luis Obispo and its officers,
employees, attorneys, representatives, and agents harmless from and against any
and all claims, demands, losses, damages, injuries, costs, expenses (including
attorneys’ fees) fines, penalties, or liabilities arising from, related to or associated with:
the issuance of a Commercial Cannabis Operator Permit or use permit; the perm itting
or approving the operation of a Commercial Cannabis Activity; the collection of any
fees, taxes, or charges from a Commercial Cannabis Business; the Commercial
Cannabis Business’s or any of its Owners’, Operators’, managers’, employees, or
agents’ violation of any federal, state or local laws; the City’s suspension, revocation
or refusal to renew the Commercial Cannabis Operator Permit.
B. Maintain insurance with standard City coverages and limits, but with additional
conditions thereon deemed necessary by the City Attorney.
Page 156 of 161
Ordinance No. _____ (2022 Series) Page 25
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C. Reimburse the City of San Luis Obispo for any and all costs, expenses, attorney fees,
fines, penalties and court costs that the City of San Luis Obispo may be required to
pay as a result of any legal challenge related to the City’s approval of a Commercial
Cannabis Operator Permit pursuant to this Chapter or any other City permit or the City
of San Luis Obispo’s approval of the operation of a Commercial Cannabis Activity.
The City of San Luis Obispo may, at its sole discretion, participate at its own expense
in the defense of any such action, but such participation shall not relieve the
obligations imposed under this Chapter.
D. Consent to unscheduled inspections, production of records and recordings, and
obtaining of samples of cannabis and cannabis products by authorized City officials
during normal operating hours as provided in this chapter.
9.10.170 Compliance with Laws.
The Commercial Cannabis Business shall operate all times in compliance with all
applicable state and local laws, regulations, and any specific, additional operating
procedures or requirements which may be imposed as conditions of approval of the
Commercial Cannabis Operator Permit or use permit or state license(s). Nothing in this
Chapter shall be construed as authorizing any action which violates state law or local law
with respect to the operation of a Commercial Cannabis Activity
9.10.180 Permit Violation.
Compliance with all local and state cannabis-related laws shall be a condition of a City
Commercial Cannabis Operator Permit and it shall be a violation of a Commercial
Cannabis Operator Permit for a permittee or his or her agents or employees to violate
any local or state -cannabis-related law.
9.10.190 Permit Compliance Monitoring.
Compliance with this chapter shall be monitored by the San Luis Obispo police
department, Code Enforcement staff and/or any other duly authorized agent of the City.
Any compliance checks pursuant to this chapter shall be in addition to any under any
other ordinances, regulations or permits. At least four compliance checks of each
cannabis retailer shall be conducted during each twelve-month period. At least two
compliance checks of each Commercial Cannabis Business other than a retailer shall be
conducted during each twelve-month period. The cost of compliance monitoring shall be
incorporated into the annual renewal fee.
9.10.200 Permit Holder Responsible for Violations By Employees or Agents.
The responsible person and any entity to whom a Commercial Cannabis Operator Permit
is issued pursuant to this Chapter shall be responsible for all violations of the regulations
and ordinances of the City of San Luis Obispo, committed by the permittee, any employee
or agent of the permittee, which violations occur in or about th e premises of the
Commercial Cannabis Business, even if the responsible person is not present. Violations
by an employee or agent may result in the termination or non -renewal of the permit.
Page 157 of 161
Ordinance No. _____ (2022 Series) Page 26
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9.10.210 Consumption or Use Prohibited On-site and in Public/Cannabis Event
Prohibited
A. It is unlawful for any person or entity:
1. To sell, give, exchange, dispense or distribute cannabis or cannabis products for
on-site consumption, use or sampling on any business premises; or
2. To consume or use cannabis or cannabis products, whether by smoking, vaping,
inhaling, eating, drinking or any other means:
a. in, on or about the premises of any Commercial Cannabis Business;
b. in, on or about any publicly owned or operated property; any place open
to, or accessible by the public; any place smoking is prohibited; or any
place visible from any public place with normal unaided vision.
c. in on or about any other business, club, cooperative or commercial event,
regardless if open to the public or only to members, ticket holders or
event invitees;
d. any location where an entry or other fee is charged to attendees or to the
host or where a thing of value or consideration is received or exchanged,
directly or indirectly, for or related to the provision of cannabis.
B. It is unlawful for any person to conduct a Cannabis Event in the City.
9.10.220 Concurrent Alcohol or Tobacco Sales or Service Prohibited.
A. No person shall dispense, serve, store, give away or consume, or cause or permit the
sale, dispensing, serving, giving away or consumption of alcoholic beverages or
tobacco in or on the premises of a Commercial Cannabis Business.
B. No person shall conduct any Commercial Cannabis Activity at any location where
alcohol is sold or served.
9.10.230 Minors
A. Minors shall not be allowed on the premises of a Commercial Cannabis Business
having either an “A” or “M” license, or both, even if accompanied by a parent or
guardian.
B. No person under 21 years of age shall be allowed on the premises of a Commercial
Cannabis Business having either an “A” or “M” license or both.
Page 158 of 161
Ordinance No. _____ (2022 Series) Page 27
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C. Every entrance to an “A” or “M” licensed Commercial Cannabis Business shall be
clearly and legibly posted with the following notice: “ENTRY ONTO THESE
PREMISES BY PERSONS UNDER 21 YEARS OF AGE IS PROHIBITED BY LAW.
VALID PHOTO ID REQUIRED.” Each letter of the notice must be at least two inches
high and clearly visible.
D. No person, business, or other entity conducting a Commercial Cannabis Activity with
either an “A” or “M’ state license shall employ any person who is not at least twenty-
one (21) years of age.
9.10.240 Sale of Cannabis Products or Cannabis Accessories by Vending
Machine prohibited
A. No person shall locate, install, keep, maintain or use, or permit the location,
installation, keeping, maintenance or use on his, her or its premises of any cannabis
vending machine used or intended to be used for the purpose of selling any cannabis
products or cannabis accessories therefrom.
B. No person, business, or other entity shall sell, offer for sale, or display for sale any
cannabis product by means of a self -service display or vending machine. All cannabis
products shall be offered for sale exclusively by means of vendor/employee
assistance.
C. “Vending machine” means any electronic or mechanical device or appliance the
operation of which depends upon the insertion of money, whether in coin or paper bill,
or debit or credit card, or other thing representative of value, which device or appliance
dispenses or releases cannabis, cannabis product(s) and/or cannabis accessories.
9.10.250 Security and Public Safety Measures.
A. The City Manager or his/her designee(s) is authorized to promulgate all regulations
necessary to implement the requirements and fulfill the purposes and policies of this
Chapter, including but not limited to enforcement, background checks for applicants,
approval and enforcement of a Commercial Cannabis Activity security plan, including
audio and video recordings of operations, and verification of compliance.
B. Every Commercial Cannabis Activity and every Commercial Cannabis Activity shall
have a security plan approved by the Chief of Police or designee prior to issuance of
a City Commercial Cannabis Operator Permit.
C. Hours of Operation.
a. Retail - Storefront. Retail-Storefront Commercial Cannabis Business shall
not operate between the hours of 8 PM and 9 AM.
Page 159 of 161
Ordinance No. _____ (2022 Series) Page 28
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b. Retail-Non-Storefront (Delivery Services). Retail-Non-Storefront (Delivery
Services) Commercial Cannabis Business shall not op erate between the
hours of 10 PM and 6 AM.
c. Commercial Other than Retail. All Commercial Cannabis Activity other than
Retail is prohibited between the hours of 10 PM and 7 AM.
9.10.260 Limitations on City’s Liability.
The City shall not be liable for issuing, or failing or refusing to issue, suspending, revoking
or failing to renew a Commercial Cannabis Operator Permit pursuant to this Chapter or
otherwise approving or disapproving the operation of any Commercial Cannabis Business
pursuant to this Chapter.
9.10.270 Fees Deemed Debt to City.
The amount of any fee, cost or charge imposed pursuant to this Chapter shall be deemed
a debt to the City of San Luis Obispo that is recoverable in any court of competent
jurisdiction.
9.10.280 Violation and Penalties.
A. Misdemeanor. Each violation of the provisions of this chapter shall be a misdemeanor
and is punishable as provided in Section 1.12.030 of this code; provided, that where
the City attorney determines that such action would be in the interest of justice, he/she
may specify in the accusatory pleading that the offense shall be an infraction. Any
violation of the provisions of this chapter by any person is also subject to administrative
fines as provided in Chapter 1.24 of this code.
B. Infraction Violation. Where the City attorney determines that, in the interest of justice,
a violation of this chapter is an infraction, such infraction is punishable by a fine not
exceeding one hundred dollars for a first violation, a fin e not exceeding two hundred
dollars for a second violation of the same provision within one year, and a fine not
exceeding five hundred dollars for each additional infraction violation of the same
provision within one year.
C. The fine amounts set forth above may be modified, from time to time, by City Council
resolution. In no event shall such fine amounts exceed the amounts authorized by
state law.
D. If the City of San Luis Obispo finds, based on substantial record evidence, that any
person has engaged in Commercial Cannabis Activity in violation of this Chapter, the
City shall fine that person as follows. Each day that person without a Commercial
Cannabis Operator Permit offers cannabis or cannabis products for sale or exchange
shall constitute a separate violation and assessed a fine in accordance with Sections
1.12.080 and 1.24.070(A) of this code.
Page 160 of 161
Ordinance No. _____ (2022 Series) Page 29
O ____
E. Each person committing, causing, or maintaining a violation of this chapter or failing
to comply with the requirements set forth herein shall be deemed guilt y of a separate
offense for each and every day during any portion of which any violation of any
provision of this chapter is committed, continued, maintained, or permitted by such
person and shall be punishable accordingly.
F. The violation of any provision of this chapter shall be and is hereby declared to be a
public nuisance and contrary to the public interest. Any public nuisance under this
chapter may, at the City’s discretion, be abated by the City by civil process by means
of a restraining order, preliminary or permanent injunction or in any manner provided
by law for the abatement of such nuisance. The City shall also be entitled to recover
its full reasonable costs of abatement. The prevailing party in any proceeding
associated with the abatement of a public nuisance shall be entitled to recovery of
attorneys’ fees incurred in any such proceeding if the City has elected at the initiation
of that individual action or proceeding to seek recovery of its own attorneys’ fees.
G. In lieu of issuing a criminal citation, the City may issue an administrative citation to
any person responsible for committing, causing or maintaining a violation of this
chapter. Nothing in this section shall preclude the City from also issuing a citation upon
the occurrence of the same offense on a separate day.
H. The remedies set forth in this chapter are cumulative and in addition to any and all
other l remedies available at law or equity, whether set forth elsewhere in the San Luis
Obispo Municipal Code, or in state or federal laws, regulations, or case law. In addition
to other remedies provided by this chapter or by other law, any violation of this chapter
may be remedied by a civil action brought by the City attorney, including but not limited
to administrative or judicial nuisance abatement proceedings, civil or criminal code
enforcement proceedings, and suits for injunctive relief. The remed ies provided by this
chapter are cumulative and in addition to any other remedies available at law or in
equity.
9.10.290 Severability.
If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this
chapter is for any reason held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of the remaining sections,
subsections, subdivisions, paragraphs, sentences, clauses or phrases of this chapter or
the rules adopted hereby. The City Council of the City of San Luis Obispo hereby declares
that it would have adopted each section, subsection, subdivision, paragraph, sentence,
clause or phrase hereof, irrespective of the fact that any one or more other sections,
subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or
unenforceable.
Page 161 of 161
Cannabis Business Program and
Regulations Update
October 18, 2022
Recommendations
1.Receive an update on the City’s Cannabis Business Program;and
2.Introduce an Ordinance clarifying the requirements for applying,
obtaining,activating,and renewing commercial cannabis operator
permits in the City;and
3.Adopt a Resolution updating the merit criteria used in the evaluation of
retail storefront cannabis business operator permit applications;and
4.Provide direction to staff to further evaluate and return at the next
annual cannabis program update with recommendations
addressing requests to modify specific cannabis retail storefront
policies.
2
Previous Council Action
Council adopted an Ordinance establishing regulations for commercial cannabis
businesses and personal cultivation5/15/2018
Council adopted an Ordinance designating areas of the City where cannabis
business activity may be located.9/18/2018
Council adopted a Resolution approving the cannabis operator permit ranking
criteria and establishing an annual application submittal timeframe.10/16/2018
Council adopted an Ordinance establishing taxes for cannabis business
operations.12/3/2018
Council adopted a Resolution updating the cannabis operator permit ranking
criteria and establishing an annual application submittal timeframe.12/3/2019
Council adopted an Ordinance updating the application procedures and submittal
requirements for commercial cannabis operator permits.1/14/2020
Council adopted an Ordinance establishing uniform permit renewal requirements.2/2/2021
3
Operator Permit Updates
Business Business Status
Retail Storefronts
Megan’s Organic Market Opened and operating in the City
SLO Cal Roots Opened and operating in the City
Natural Healing Center Operator permit was terminated in October 2021
Manufacturing, Distribution, and Retail Non-Storefronts
Coastal Delivery SLO Opened and operating in the City
Pure SL Awaiting final building permit
Paper Bear Farms Closed for operation
Cali Direct Decided not to continue pursuing an operator permit
Element 7 Lapsed on timeline to activate permit (per §9.10.070(D))
4
Note: 12 outside delivery businesses currently permitted to operate in the City
Cannabis Tax Revenue
FY2020 FY2021 FY2022 FY2023
Actual $96,367 $830,265 $997,719 $154,501
Budgeted $64,000 $400,000 $1,000,000 $1,400,000
$0
$250,000
$500,000
$750,000
$1,000,000
$1,250,000
$1,500,000
5
Cannabis Operator Permit Fees
FY2020 FY2021 FY2022 FY2023
Actual $45,376 $169,725 $250,575 $123,196
Budgeted $100,000 $320,000 $157,000 $210,000
$0
$100,000
$200,000
$300,000
$400,000
Annual
Operating
Permits fees
Reduced in
January 2021
6
Open Application Period
Established Annual Open application Period: July 1 thru July 31
•In July,the City opened to all permit types except retail storefront
applications.However,no applications were submitted.
•If Council adopts staff’s recommended amendments,a retail storefront
application period can be opened by the City Manager as authorized
by section 9.10.070(B).
•Council would be notified in advance of any additional application
period opened by City Manager authorization.
7
Retail Storefront Merit Criteria Update
Community Benefit Section
1.Section 1.1B -has been changed to clarify the number of points available for 10-20
hours of community service per month (2 points)versus more than 20 hours of
community service per month (5 points).
2.Section 1.3B -has been changed to clarify what “a history of supporting local
community programs”means.It is now defined as “the past one year.”
Equity and Labor Section
3.Section 3.4 -has been eliminated as State laws surrounding “labor peace
agreements”are already triggered for businesses with 20 or more employees.
•Removing Section 3.4 results in the maximum score for Equity and Labor
changing to 18 points.
Total Merit Criteria Points Available
4.The total maximum points for a Retail Storefront application is now 138 points.
8
Cannabis Regulations Update
Definitions (9.10.020)
Terms added:Applicant,Financial Interest Holder,Majority,Operator,Owner,
Principal(s),Primary Principal,and Social Equity Owner.
Commercial Cannabis Operator Permit Application Procedures and Requirements (9.10.070)
Expanded to clearly state that felony convictions including criminal misconduct within
5 years of the application submittal date is grounds for automatic disqualification.
The timeline to activate a permit is extended from 12 months to 24 months from
date of permit issuance.
Suspension or Revocation of Permit (9.10.090) and Appeal (9.10.100)
Expanded to include immediate revocation for criminal or regulatory misconduct
discovered following the activation of a permit or for providing false or misleading
statements during the application process.Such revocations would be subject to
appeal.
9
Cannabis Regulations Update
Prohibition on Transfer of Commercial Cannabis Operator Permits (9.10.120)
•Section is expanded to include a 3-year moratorium on majority transfers of
ownership after a permit is activated.
•Transfers of Ownership(s)are prohibited if they result in a reduction or elimination
of Social Equity Owner(s)or the percentage of social equity ownership compared
to the original application.
•Owners,permit holder,and Financial Interest Holders are also prohibited from
obtaining ownership of any kind in more than one storefront operated in the City.
Inspections and Enforcement (9.10.140)
Any commercial cannabis business found in violation of Chapter 9.10 throughout the
application and permitting process is subject to the enforcement provisions of this
chapter.
10
Policy Change Requests from
Commercial Cannabis Operators
1.Extend Storefront Operating Hours
Request to open 2 hours earlier and stay open 1 hour later than
currently allowed
2.Allow 18+ Medical Cannabis User Access to Storefronts
18+ medical users are currently prohibited from accessing retail
storefronts but can obtain cannabis products from delivery services
3.Allow Storefronts to Deliver within the City
Storefronts are currently prohibited from providing delivering
services within City limits
Retail Storefront Operating Hours
SLO Delivery 6AM –10PM
SLO Storefronts
(Current)9AM –8PM
SLO Storefronts
(Requested)7AM –9PM
City of Morro Bay 7AM –9PM
City of Grover Beach 7AM –9PM
State of California 6AM –10PM
Staff is seeking input and direction from City Council to further evaluate and return with
recommendations on the following policy changes:
11
Alternatives to Staff’s Recommendations
1.Do not adopt staff recommendations.This is not recommended as
it does not align with the City Council’s overall cannabis goal to
obtain and retain qualified cannabis business operators in the City.
2.Modify the Proposed Resolution.The City Council has the latitude
to make modifications to the Cannabis Operator Permit Application
Requirements and Ranking Merit Criteria.The Council has the policy
discretion to adjust application requirements and ranking criteria.
3.Modify the Proposed Ordinance Amendments.The City Council
has the latitude to make further modifications to the proposed
Chapter 9.10 Municipal Code updates.The Council has the policy
discretion to adjust the cannabis regulations.
12
Recommendations
1.Receive an update on the City’s Cannabis Business Program;and
2.Introduce an Ordinance clarifying the requirements for applying,
obtaining,activating,and renewing commercial cannabis operator
permits in the City;and
3.Adopt a Resolution updating the merit criteria used in the evaluation of
retail storefront cannabis business operator permit applications;and
4.Provide direction to staff to further evaluate and return at the next
annual cannabis program update with recommendations
addressing requests to modify specific cannabis retail storefront
policies.
13
Questions 14
Alternative Language to ‘Prohibition Against
Social Equity Reduction’ Subsection (9.10.120(E))
15
Proposed Language
Notwithstanding any other provision of this subsection,any transfer of ownership that will result in
the reduction or elimination of the total number of Social Equity Owners or percentage interest of
social equity ownership in a Commercial Cannabis Business from the number or ownership
percentage proposed in the original Commercial Cannabis Operator Permit applications
prohibited.This prohibition shall include the internal transfer of ownership from one currently
permitted Operator to another,and transfers of Social Equity Owner interests of any kind require
both prior notice and approval of the City to verify compliance with this section.
Alternative Language
Notwithstanding any other provision of this subsection,for three years following the date on which
the Commercial Cannabis Business activates its Commercial Cannabis Operator Permit in
accordance with 9.10.070(D),no transfer of ownership will be permitted if the transfer results in a
reduction in the total number of Social Equity Owners or in the percentage interest of Social Equity
Ownership below a two (2)percent interest threshold.This restriction shall include the internal
transfer of ownership from one currently permitted Operator to another,and transfers of Social
Equity Owner interests of any kind require both prior notice and approval of the City to verify
compliance with this section.
1010 Marsh St., San Luis Obispo, CA 93401
(805) 546-8208 . FAX (805) 546-8641
PROOF OF PUBLICATION
(2015.5 C.C.P.)
STATE OF CALIFORNIA,
County of San Luis Obispo,
I am a citizen of the United States and a resident
of the county aforesaid; I am over the age of
eighteen years, and not a party interested in the
above entitled matter. I am the principal clerk
of the printer of the New Times, a newspaper
of general circulation, printed and published
weekly in the City of San Luis Obispo, County
of San Luis Obispo, and which has been
adjudged a newspaper of general circulation by
the Superior Court of the County of San Luis
Obispo, State of California, under the date of
February 5, 1993, Case number CV72789: that
notice of which the annexed is a printed copy
(set in type not smaller than nonpareil), has been
published in each regular and entire issue of said
newspaper and not in any supplement thereof on
the following dates, to -wit:
at[ 1?-
in the year 2022.
I certify (or declare) under the the penalty of
perjury that the foregoing is true and correct.
Dated at San Luis Obispo, CaliNirma, this day
of YrW—, 2022.
�c
Katy Gray, New as L als
l&Mll6 P-1U.NTMGa in/NTMG0fi,,'P1,NFS1Prb4: Naltt./Pva(uf Pob
SAN LUIS OBISPO
0 CITY COUNCIL
NOTICE OF PUBLIC HEARING
The San Luis Obispo City Council invites all interested persons to
attend a public hearing on Tuesday, sephmber se. i,2 Of S,,
p.m. held in the Council Chambers at City Hall, 990 Palm Street
San Luis Obispo_ Please note thet Zoom participation will net
he supported, as this will be an in -person meeting. Meetings
can be viewed remotely on Government Access Channel 20 or
en .... I live from the CiVa YauTtube channel at hip//yominua
slo.city. Public comment prior On, the stare M the meeting, may
be submitted in waning via U.S. Mail delivered to the City Clerk's
office at 990 Palm Street San Luis Obispo, CA Mel or by email to
emailcouncil®slockforg.
PUBLIC NEARING ITEMS:
r
The City Council will review Of'an Want of the Planning
Commission's decision to approve a Minot Use Permit to
establish a multi -vend., facility that includes a b.,A .....
restaurant commercial recreation, general retail, indoor
live entertainment and food trucks. The prolect includes a
parking reduction request and is categorically exempt from
environmental review (120 Miami Streeh APPL02M-
20221.
Far mare information, you are invited to contest
Hannah Race of Me City's Community Oevelopmem
Oepartmant It(805)2BIJa8Z or bhanbf .aftyarp
The City Council will receive the Annual Cannabis Program
Update, introduce an Ordinance amending Chapter 9,10
(Cannabis Raguktionel of the Municipal Code to clarify
requirements Or applications and operator permits, and
adopt a Besaludom updating the Merit Crearia for Retell
Storefront Cannabis Business Operator Permits.
For. submission, You. u w wed 0 cameo
Alexander Fuchs of Me Crtys Community Oamlopmem
OePartmeM al (&25)2B3J81J w eyushs®slocityarg
The City Council may also discuss other hearings or business
items before or atterthe Rome listed above. If you challenge the
proposed prolect in mun you may be limited to raising only those
issues you or Panama elsi raised mthe public hearing described
in this notice, or in woman correspondence delivered to the City
Council at or prior to.the public hearing.
Council Agenda Remits for this meeting will be available for
review one week in advance of the meefin, date on the City's
websbe, under the Public Meeting Agendas web page: httpsd/
www..stocitV.org/gowrnmenUmayar-and-city-couneipagendes-
and-minutes. Please call Me City Clerk's Office at 08051781-711
for more informabon The City Council Owning will be televised
live on Charter CableChannal 20 and live screaming on the City's
YouTube channel http:/ypurubasloxity,
September 8, 2022
wwv,.newtimesslo.com • Septembe